CNBC Daily Open: Markets rebound in time for the Santa Claus rally

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.

Restarting the rally
U.S. stocks shook off losses from the previous day to restart their rally Thursday, buoyed by a strong showing from chipmakers. Europe’s Stoxx 600 index fell 0.21%, dragged down by shares of Delivery Hero, which sank 10.87% to put the German food delivery company at the bottom of the index.

What happened?
Wall Street abruptly sank Wednesday, giving the S&P 500 its worst day since September. The sell-off spread to Asia-Pacific overnight and continued with Europe seeing losses Thursday. After nine straight days of gains, what triggered the about-turn? Some think it’s investors taking profits; some pointed to a high volume of zero-day options trading; others blamed FedEx’s disappointing outlook.

$10,000 per container
Amid diversions from the Red Sea because of Houthi attacks, the rate of shipping a 40-foot container from Shanghai to the U.K. hit $10,000. By contrast, it cost only $2,400 to ship the same container last week. Truck rates in the Middle East have also more than doubled. As of Thursday morning U.S. time, there were 158 vessels carrying over 2.1 million cargo containers re-routing away from the Red Sea.

Bern Agreement
The U.K. and Switzerland signed a new post-Brexit financial services deal, known as the Bern Financial Services Agreement. It’ll allow Swiss firms to serve wealthy individuals within the U.K., replicating privileges currently available to British firms in Switzerland, while U.K. advisors will be permitted to “temporarily serve” clients in Switzerland without registering there.

[PRO] Will Micron continue rising?
Micron reported earnings Wednesday after the bell, beating estimates and giving a better-than-expected forecast for the current quarter. The memory chipmaker’s shares jumped 8.63% as a result. It’s an “early Christmas present,” said one Wall Street analyst, while another gave the stock a 20% upside. But others think it’s too premature to celebrate.

In a sign of strength, major indexes rebounded off their worst day in months on Wednesday to rise again yesterday. The Dow Jones Industrial Average gained 0.87%, the Nasdaq Composite climbed 1.26% and the S&P 500 added 1.03%.

The S&P’s now tantalizingly near its record close again — just around 1% away, to be specific.

Even though the S&P sank the most in three months on Wednesday, it’s still on track to see a winning week. That’d give the index its eighth positive week in a row, the longest winning streak it’s enjoyed since 2017.

Yesterday’s rally was broad-based, with more than 450 names rising in the S&P, but chip stocks were a standout. Shares of Micron Technology, in particular, popped 8.6% to put it at the top of the charts after the chipmaker reported positive earnings. Its rising tide helped lift the sector as a whole: Marvell Technology jumped 4.71%, Arm added 4.09% and Advanced Micro Devices rose 3.28%, to name a few.

Optimism from individual investors might have helped the resilience of U.S. stocks. Bullishness about the outlook for stocks across the next six month is at the highest since April 2021, according to the latest survey by American Association of Individual Investors.

But UBS managing partner Michael Riesner thinks the rally in stocks is “the setup for a classic bull trap.” Stocks may not rise sustainably into the new year, Riesner thinks, because of low volatility and yields hitting oversold levels.

Still, let’s not dampen the holiday cheer. Today marks the first day of the “Santa Claus rally.” It comprises the final five trading days of the year and the first two of the new year, during which the S&P, on average, sees gains of 1.3%, according to Jeff Hirsch, editor of the Stock Trader’s Almanac.

The seasonal strength’s proven so enduring that the S&P has seen declines only two times across the past 10 Santa rally periods, noted CNBC’s Robert Hum. And with the S&P up around 3% month to date, it looks like investors will have presents under the tree this year.

Happy holidays!