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CNBC Daily Open: Markets’ holiday cheer continues

2 months ago 39

Traders work on the floor of the New York Stock Exchange (NYSE) on the first day back since the Christmas holiday on December 26, 2023 in New York City.

Spencer Platt | Getty Images News | Getty Images

This report is from today's CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Striking distance
U.S. markets rose Tuesday as investors returned after the Christmas holiday, with the S&P 500 within striking distance of its all-time high and the Nasdaq 100 gaining 0.6% to close at a record high. European markets were closed for the Boxing Day holiday.

Bitcoin strategy
MicroStrategy is a 35-year-old software company that's been little known for most of its existence. This year, its stock soared 337%, beating even Nvidia's 234% rally. But it's neither exploding revenue nor market share that's propelling the stock up. Its secret? MicroStrategy put its money into bitcoin and has benefited from the rally. The company now owns about $7.65 billion worth of bitcoins.

Extended AI boom
When investors mention artificial intelligence, Nvidia's more often than not mentioned in the same breath. But other technology stocks have also attracted Wall Street's attention in the race to profit from AI. Software vendors CrowdStrike, HubSpot and Salesforce at least doubled in price this year, while semiconductor and data center stocks have also surged due to the AI boom.

Restarting the clock
Apple filed an appeal against the decision to ban imports of its Apple Watches after U.S. President Joe Biden's administration declined to veto a government tribunal. The ban, imposed by the U.S. International Trade Commission, stems from an intellectual property dispute between Apple and medical technology company Masimo over what the latter claims is its blood-oxygen monitoring technology.

[PRO] Bright spot for renewables
The alternative energy sector had a tough 2023 because of high interest rates. One solar energy ETF has fallen nearly 28% this year. But the good news' that the sector has hit a bottom because rates have hit their peak, according to the U.S. Federal Reserve. What can we expect for renewable energy stocks in 2024? CNBC Pro's Spencer Kimball breaks down the bright spots — and dim corners — for the sector.

The bottom line

Christmas Eve — the day ripest with anticipation— may be over, but investors still have something to look forward to.

On Tuesday, all 11 sectors of the S&P 500 rose, pushing up the index 0.42%. The S&P closed at 4,774.75, less than 1% away from its record close of 4,796.56 set in January 2022. All eyes are now trained on when the S&P will reach a new high.

Other major indexes were also suffused by the Christmas spirit. The Dow Jones Industrial Average rose 0.43% and the Nasdaq Composite climbed 0.54%. The Russell 2000 Index, typically seen as an indicator of economic sentiment in the broader economy, did even better, gaining 1.24% to hit its highest level in more than a year.

"I don't love the term, but if you were to describe what is happening it's definitely Goldilocks for the market," said Jan Szilagyi, CEO and co-founder of Toggle AI. "Inflation's coming down, the economy is still chugging along, and the hiking cycle's over. On all of these macro trends, the rally has been justified."

Adding to the sense of anticipation in the air, former Dallas Federal Reserve President Robert Kaplan told CNBC on Tuesday he expects the central bank to start cutting rates soon.  

"One of the reasons we got into this inflationary problem is the Fed stayed way too accommodative for too long, even as the economy was improving, and I don't think it wants to make the same mistake on the flip side, where it stays too restrictive," said Kaplan. 

The danger of rates staying too restrictive is that "the lagged impacts of rate hikes will get the economy," according to Wolfe Research's chief investment strategist Chris Senyek. That might result in something else "break[ing] in the system," as Komal Sri-Kumar, president of Sri-Kumar Global Strategies, put it.

For now, however, Santa's still spreading holiday cheer. Data from the Mastercard SpendingPulse indicator suggests retail spending, excluding autos, climbed 3.1% this holiday season from last year. That's a sign the consumer's still strong, and the U.S. economy — and, indeed, financial markets — may still have presents under the tree going into next year.

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