Stocks were mixed Friday and moved higher this week, as low volume, Omicron, dominated the narrative of the light week as investors responded to minimal earnings and economic reports.
The Santa Claus rally came to fruition this week as tax considerations, low volume, Christmas bonuses & gifts, among other variables, helped to keep the holiday phenomenon intact. However, markets still have the next two trading days to make it on the Naughty List, so we won’t start countin’ chickens yet.
All eleven sectors finished the week higher, with Materials and Consumer Discretionary stocks leading the way as Financials and Communication Services sectors lagged behind.
Travel Woes
During the days following Christmas, the narrative surrounding travel was one of cancellations and warnings.In regards to air travel, 6,521 flights were canceled during a six-day period. Airlines had been enduring staffing issues alongside many other industries going into the holiday season. The staffing issue got compounded by 1) the recent wave of Omicron, which spread through the limited staff and closed flights, and 2) a strong return to air travel. Oh, and of course snowstorms in the Pacific Northwest played their part as well.
Unsurprisingly, given rampant cancellations, Airlines didn’t keep up with the market this week. Airlines as a whole rose 0.72%, compared to a 0.68% rise for the S&P 500 during the same period.
However, this seemed to be more influenced by smaller-cap Airlines as all of the top 5 airlines by market cap managed to beat or remain in line with the market except for Ryanair Holdings (RYAAY), which declined 2.29% during the week. Southwest (LUV) rose the most, advancing 4.23% while Delta (DAL) rose 2.10%.
Another travel group that missed out on a slight Santa Claus rally was cruise lines. Cruises were dealt a blow after the CDC recommended that cruises should be avoided regardless of vaccination status as the risk of infection is “very high” according to the CDC, with the recommendation reflecting “increases in cases onboard cruise ships since [the] identification of the Omicron variant.”
Of the three major cruise lines, Carnival (CCL), Royal Caribean (RCL), and Norwegian Cruise Line (NCLH), only Royal Caribbean finished in the green, albeit, it was a very slight advance of 0.16%. Carnival declined 1.09% and Norwegian dropped 5.11%.
Retail Faves
While travel stocks struggled, retail favorites were surprisingly hit-or-miss this week as the Top 5 stocks in Robinhood’s “100 Most Popular” list failed to take advantage of the light volume associated with the season.General Motors (GM) rose 2.97%, while Ford (F) rose 2.46%. Automaker-rival Tesla (TSLA) dropped 1.60% as CEO Elon Musk continues to offload shares, adding about $1 billion worth of stock back into the market. Meanwhile, Apple (AAPL) creeped higher by 0.27% and AMC (AMC) fell 4.23%.
In Apple’s case, it was likely just time to cool off following an extended rally in record-high territory.
AMC, on the other hand, is swirling with speculation after an alleged technical glitch showed short interest (SI) on the meme-stock at 40.25% on TD Ameritrade. This led to the hashtag #AMCSI40 to gain traction and trend on Twitter as the “ape army” ran to AMC’s rescue for a good ol’ fashioned short squeeze.
The weird thing was, other places had SI between 14.85% and 18.84%. Some defended TD Ameritrade’s 40% figure, with some even citing RBC Direct Investing and Ally Investing. However, the response to the tweets was one of skepticism, with many alleging that the images provided were photoshopped.
AMC rose 7.55% from open to high on Thursday before pulling back some on Friday.
While a retail-led short squeeze could have been the perfect end to a year dominated by retail investor influence, my money is on glitch because it would seem a bit odd (and rather poorly timed) for institutional investors to take a huge stake against a meme-stock during a week of very light volume, which is known for giving retail investors greater ability to influence the price.
All told, the S&P 500 rose 0.68% this week while the Dow jumped 1.06%. The Nasdaq crept dropped by 0.33% the Russell 2000 rose 0.18%.