S&P 500 closes little changed, Nasdaq rises to a record in shortened session
The S&P 500 was flat and the Nasdaq Composite edged higher on Tuesday to another new record in muted Christmas Eve trading.
The Dow Jones Industrial Average fell 36.08 points, or 0.1 percent, to 28,515.45, while the S&P 500 finished the day little changed at 3,223.38. The Nasdaq Composite rose slightly to hit a new record high of 8,952.88, posting its ninth consecutive record close for the first time since 1998. Trading was subdued in the holiday session and the market was closed at 1 p.m. ET.
The three major averages all posted record closes on Monday. The S&P 500 has risen 2.6 percent for December and 8.2 percent for the quarter. It is also on pace for its best annual performance in six years, up 28.6 percent for 2019 through Monday’s close. If the benchmark ends the year up more than 29.6 percent, it will score the best year since 1997.
“The equity narrative is the same as it was at Monday’s close and probably will stay unchanged for the remaining 1.5 weeks of 2019,” Adam Crisafulli, founder of Vital Knowledge, said in a note. “But investors will return in January to find a complacent market trading at very elevated multiples and harboring unrealistically optimistic expectations about an upward inflection in growth/earnings momentum.”
The S&P 500 is currently trading at about 18 times forward earnings, the highest level since January 2018, according to FactSet.
Tuesday marked the official start of the Santa Claus rally period, which happens on the final five trading days of the year and the first two tradings days of the new year. Stocks tend to have unusually strong performance during those trading days with the S&P 500 averaging a 1.3 percent gain since 1950, according to the Stock Trader’s Almanac.
Investors cheered the news this week that China is taking action to goose its economy. The country said it will boost imports by cutting tariffs on over 850 products. The Chinese government also said it would study additional cuts in the bank reserve-ratio requirements. The moves come as China and the U.S. agreed on a phase one trade deal and are working to ink the agreement.
President Donald Trump said Tuesday the trade deal with China is getting done, adding there will be a signing ceremony with Chinese leader Xi Jinping.
The U.S. stock market is closed on Wednesday for Christmas. Thursday and Friday are regular trading days.