Stock Market Today: Risk-on Rally Powers Equities Higher for the Week

A Santa Claus rally is the sustained increase in the stock market that occurs around the Christmas holiday on Dec. 25. Most estimate these rallies happen in the week leading up to the Christmas holiday, while others see trends that begin Christmas Day through Jan. 2. A bear market is commonly defined as a stock market decline of 20% or more. At some point during the downturn, an orderly retreat typically turns into high-volume panic selling.

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High interest rates increase borrowing costs for U.S. companies looking to invest in growing their businesses, weighing on economic growth. High interest rates on credit cards, mortgages and other consumer debt also makes shoppers less willing to spend money to support the economy. “On the equity side, we do not expect the U.S. debt situation to cause the type of market volatility experienced in 2011.

What is a bear market rally?

Alternatively, if you don’t feel ready to trade live markets yet, you can open how to use bitcoin lightning network a demo account to practise your strategy first in a risk-free environment. Fundamentally though, your reaction will also vary depending on whether you’re a long-term investor or short-term trader. Wall Street analysts currently have an average 12-month S&P 500 price target of 5,034, suggesting about 14.1% upside from current levels. That price target also reflects consensus expectations that the S&P 500 will break above its January 2022 peak of around 4,818 and make new all-time highs within the next year. The Labor Department reported the U.S. economy added 187,000 jobs in July.

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Once investors looked through those threats, the path of least resistance for the market was higher. The S&P 400 Mid Cap Index ($MID) and S&P 600 Small Cap Index ($SML) are both above their November lows and approaching their all-time highs (see chart below). Retail investors also sold the most stock in October than in any month in the last two years, signaling they, too, may be about to ramp up purchases. “You have seasonality, November, December, the best two months of the year,” Pelosky listed. “You have sentiment up until the last week that was very, very bearish.”

1. While Tidewater currently has a “Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.
2. For example, if you’re a scalper – who prefers to hold a position from seconds to minutes – you might only focus on a much shorter period of the rally.
3. When the indicator line is at 10, it means ten stocks have increased in price compared to one that has decreased.
4. Treasury yields eased slightly as investors waited for further economic data.
5. The January Barometer is a theory that claims that the returns experienced in the January stock market predict the performance of the market for the upcoming year.

Experts believe the market’s rebound is driven more by technical factors than by fundamental ones, noting a lack of fresh, positive triggers to drive further momentum. With Nvidia the last remaining high-profile firm to report results earlier this week, investors can now assess the big takeaways from earnings season. The Federal Reserve isn’t likely to continue cutting interest rates with inflation again threatening and could even be forced to raise rates again. Consumers could also curtail their spending because of the sudden spike in prices. The situation would get even worse if other countries enacted retaliatory tariffs and ignited a full-blown trade war that hurts U.S. exporters. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, configuration control board definition of configuration control board happier, and richer.

It’s normal for rallies to occur during market declines, and unless the price rises by more than 20% again, it is still considered a bear market. Bear market rallies are an essential part of the market cycle, as they do indicate changes in investor sentiment. However, these rallies rarely last longer than days or weeks until a market correction occurs.

When the indicator line is at 10, it means ten stocks have increased in price compared to one that has forex trading strategies for beginners decreased. A stock rallies when demand exceeds supply, pushing prices upwards. Some investors may be executing tax-loss harvesting and repurchases or investing year-end cash bonuses into the market.

A rally can be cyclical, sector, broad market, short, medium, or long-term. The deepest bear markets have in the past produced the biggest bear market rallies. In the aftermath of the Stock Market Crash of 1929, the Dow Jones Industrial Average went on to rebound 48% from mid-November through mid-April of 1930.