Volume was thin Thursday with several international markets closed and many participants extending their holiday fun. Stocks opened the day lower but found their way into positive territory by lunchtime. The enthusiasm faded into the close, however, putting this year's Santa Claus rally at risk.
The Santa Claus rally is "officially defined as the last five trading days of the year plus the first two trading days of the new year," says Adam Turnquist, chief technical strategist for LPL Financial. "Since 1950, the S&P 500 has generated average and median returns of 1.3% during this period, widely outpacing the market's average seven-day return of 0.3%."
Turnquist adds that when stocks deliver a positive Santa Claus rally return, "the S&P 500 has generated an average January and forward annual return of 1.4% and 10.4%, respectively."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
After closing higher in Tuesday's abbreviated session, the Dow Jones Industrial Average finished today up 0.07% at 43,325, while the S&P 500 was 0.04% lower at 6,037, and the Nasdaq Composite had shed 0.05% to 20,020.
Investors shouldn't worry about short-term volatility
"The recent volatility appears to be a combination of a Fed more cautious about cutting than hoped for, and the difficult-to-forecast bold changes proposed by the Trump administration which while bullish in theory might be costly in the short term," says Louis Navellier, chairman and founder of Navellier & Associates.
Despite any short-term struggles, Navellier reminds us that "we've had two very strong years in the stock market" and that looking ahead, artificial intelligence (AI) promises to bring big gains in productivity and interest rates are likely to continue falling. "Even without a Santa Claus Rally, there's a lot to celebrate and look forward to," he says.
Continuing claims hit a three-year high
Initial jobless claims headlined a relatively light economic calendar. Data from the Labor Department showed first-time filings fell by 1,000 in the week ending December 21, to 219,000. More notable was that continuing claims rose to 1.91 million from 1.86 million the week prior – the highest level since November 2021.
"For now, the consumer has a healthy appetite for travel and other discretionary items but elevated continuing claims suggest a slowdown in the job market," says Jeffrey Roach, chief economist for LPL Financial.
Analysts think Palantir can fall by 45%
In single-stock news, Palantir Technologies (PLTR) fell 0.3% even after Wedbush analyst Daniel Ives said the data analytics firm is one of the best software companies to benefit from AI in 2025.
"We believe Palantir has a credible path to morph into the next Oracle (ORCL) over the coming decade with (Artificial Intelligence Platform) leading the way as many on the Street continue to be huge skeptics of the Messi of AI," the analyst says.
Ives is arguably one of the biggest bulls in Palantir's corner with an Outperform (Buy) rating and a $75 price target – though this still sits 8% below the share price. The consensus recommendation of the 21 analysts following the newest Nasdaq-100 stock surveyed by S&P Global Market Intelligence is Hold and the average price target is $43.90 – a more than 45% discount to current levels.
UBS Global Research analyst Karl Keirstead recently initiated coverage on Palantir with a Neutral (Hold) rating. He had a "very positive" review of PLTR's fundamentals, with customers and other checks "almost all bullish" on the value they are getting. "The main thing keeping us on the sidelines is valuation," Keirstead says after the stock has surged nearly fivefold this year, adding that this is "simply tough to get over."
Related content
- Best Dividend Stocks to Buy for Dependable Dividend Growth
- How to Invest Your Holiday Cash
- What to Expect From Bitcoin and Other Cryptocurrencies in 2025
-
Navigating 1099s: A Guide to All 22 IRS Tax Forms to KnowTax Filing You should receive your 1099 form by February 15. But what happens next?
-
Coach Chuck Pagano Is 'Unretiring' — What About You?Chuck Pagano is joining the Baltimore Ravens after retiring four years ago. Here's what it takes to unretire.
-
Stock Market Today: Stocks Jump Around on Fed DayFed Chair Jerome Powell plays it as straight as possible while President Trump and threats to the AI rally abound.
-
Fed Leaves Rates Unchanged: What the Experts Are SayingFederal Reserve As widely expected, the Federal Open Market Committee took a 'wait-and-see' approach toward borrowing costs.
-
Alibaba Stock Gains on Promises Its New AI Model Is Better Than DeepSeekAlibaba stock is higher Wednesday after the Chinese conglomerate said its updated AI model outperforms DeepSeek and other competitors. Here's what to know.
-
ASML Stock Remains a Strong Buy After EarningsASML stock rallied after the semiconductor supplier beat fourth-quarter expectations. Here's what you need to know.
-
T-Mobile Earnings Send Stock to the Top of the S&P 500T-Mobile stock is notably higher Wednesday after the wireless provider's earnings beat and strong full-year outlook. Here's what you need to know.
-
Starbucks Stock Pops as Turnaround Efforts Lead to Earnings Beat: What to KnowStarbucks stock is higher Wednesday after the coffee chain beat expectations for its fiscal first quarter as its "Back to Starbucks" efforts take shape.
-
How to Slash Kiddie Taxes on Your Child's UTMA AccountGifts to children can come with tax strings. To keep your child's gift growing and avoid tax bills for yourself along the way, consider this long-term strategy.
-
Your Family Money Values Matter: How to Get on the Same PageHow you grow up shapes you financially. That can make things tricky for couples and their kids, so follow these four steps to help establish your family values.
