Between Friday, December the 18th's close of 2005.55 on the S&P 500 and yesterday's close of 2078.36, the S&P rallied 3.63%. If a Santa Claus rally is defined by a rally in the five trading days before Christmas coupled with a rally in the two trading days after Christmas, we can safely say Santa Claus did not disappoint this year. Between crude's rally and the upbeat economic data we received yesterday, US equity markets punched higher and in the process closed above recent resistance at the 50DMA. All three major equity market indices gained meaningful ground as volume on the NYSE and NASDAQ ticked modestly higher but below the trailing three month average. The S&P 500 (+1.06%), Dow Jones Industrials (1.10%) and NASDAQ (1.33%) defied those claiming that Santa's rally would not materialize. The US 10-Year note yield rose 3.69% or 0.08 to close at 2.31%
As is always the case on the last Tuesday of every month, the Case-Shiller Home Price Index was released yesterday. The good news for home owners is that the HPI 20-city, SA - M/M data came in at 0.9% versus expectations calling for 0.6%. That is also bad news for those looking to buy, especially first time buyers. The 20-city, NSA - Y/Y was 5.5%, matching expectations. Investors interpreted the data in a positive light in that modestly rising home prices speak to a continuation in the economic expansion that has been rooted in improving economic data and improving consumer confidence.
The monthly Conference Board survey of Consumer Confidence, also out yesterday, provided some additional support to that thesis. The consumer-centric survey is the result of surveys sent to three thousand households across the country and measures their perceptions of both current and future economic conditions from employment to income and business conditions. Consensus was calling for 93.5. It however came in at a stronger than expected 96.5. Though not as closely watched, the State Street Investor Confidence Index released yesterday also reflected more strength than anticipated - coming in at 108.3 versus the prior 106.8.
International Trade in Goods was expected to be $-60.9B for the month. The final results were in line at $-60.5B. The real driver of yesterday's equity market rebound was crude oil. Again, crude rallied and equities followed. On the day, crude WTI rallied from $36.81/bbl to $37.86/bbl or 2.8524%. On December 21st crude WTI closed at $34.74/bbl. Inclusive of yesterday's close, crude WTI has rallied 8.981%. In five trading days, and not surprisingly, equity markets have followed - though in less dramatic fashion.