The stock market is famously unpredictable, but one thing is certain: Santa Claus just made his annual visit.
The Federal Reserve left interest rates unchanged at its meeting on Wednesday, which had many investors wondering if any gift-giving would take place this year. Santa, however, is always generous and the markets responded with a flurry of buying activity.
Value stocks were among the biggest beneficiaries of Santa’s generosity. These stocks, which trade at lower valuations than the broader market, tend to attract buyers when the investing climate is uncertain. With the Fed on hold, there is now less of a concern that more quantitative easing measures could be adopted, a development that could put downward pressure on interest rates and fuel more inflation.
Meanwhile, defensive stocks such as utilities and consumer staples also enjoyed a bump in price as concerns over further economic slowing eased. These stocks often perform better when the rate of economic growth slows as investors seek to limit their risk exposure in a volatile market.
High-growth and technology stocks continued to lead the way, however, as they have done all year. Of these, big-name tech stocks such as Apple, Microsoft, Amazon, and Google were among the biggest gainers.
Some were concerned that Apple might miss the stock market’s Santa rally after it announced disappointing sales figures for the latest iPhone model. But Apple’s stock rose more than 1% on the news, a sign that investors are still willing to bet on the company’s long-term potential.
Overall, the market rallied on the back of Santa’s generosity. But while value and defensive stocks saw the most immediate gains, it appears that high-growth and tech stocks will remain among the top performers in the new year. With the Fed now on hold, these stocks could be primed for more upside in 2020.
