Santa Claus Rally, Here Soon?

And, a defense contractor's big buy.

Steven Lerner 19.Dec.2022

Today is Monday, December 19, 2022.

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Santa Claus Rally, Here Soon?

Investors approaching the end of the year hope that they will be gifted with a Santa Claus rally.

Definition: The Santa Claus rally, also known as the Christmas rally, is a phenomenon in the stock market that refers to a historically strong period of performance in the stock market during the last week of December and the first two trading days of January. Think of the Santa Claus rally as a gift to investors in the form of positive returns.

Background: There are two reasons why experts say that the Santa Claus rally exists. One factor is increased consumer spending during the holidays, which can drive up earnings. The other factor is that this is the time of year when portfolio managers review their holdings and make adjustments before the new year starts, which drives up stock prices.

Caveat: While the Santa Claus Rally is well known, it is not a guarantee. There are some years when the rally does not occur.

Final Thoughts: Given the state of the stock market all year, a Santa Claus rally would be a decent way to end 2022 for investors.

Notables

Notable Earnings Today: Heico (NYSE: HEI), Steelcase (NYSE: SCS), Inspirato (Nasdaq: ISPO).

Notable IPOs Today: N/A.

Notable Equity Crowdfunding Campaigns Ending Today: Resilience-Building Leader Program (StartEngine), Solib Solutions (Netcapital), Fan Rebellion (StartEngine), Quigley Fine Wines (StartEngine), PherDal Fertility Science (StartEngine).

Notable Economic Events Today: N/A.

A Defense Contractor's Big Buy

Military helicopter at Air Show. — Photo by Curioso Photography / Unsplash

Defense contractor L3Harris Technologies (NYSE: LHX) announced Sunday that it is acquiring Aerojet Rocketdyne Holdings (AJRD).

Details: The deal values Aerojet Rocketdyne at $58 per share for a total value of $4.7 billion. It is an all-cash transaction. This is the second acquisition for L3Harris in 2022.

Quote: “We’ve heard the DoD leadership loud and clear: they want high-quality, innovative and cost-effective solutions to meet both current and emerging threats, and they’re relying upon a strong, competitive industrial base to deliver those solutions. - Christopher E. Kubasik, L3Harris CEO and Chair.

Stock Price: Shares of L3Harris have been flat this year, while shares of Aerojet Rocketdyne are up 18%.

Final Thoughts: Although some analysts downgraded L3Harris in December, the company did receive an $886 million U.S. military contract last week.

Shiba Inu Gets NFT Bounce

The price of the cryptocurrency Shiba Inu ticked up around 4% since Friday thanks to a gaming announcement for a non-fungible token (NFT) initiative.

Details: The Shiba Racing Team, an NFT collection, announced on Friday the launch of motorsport racing NFTs. The project will also roll out its own metaverse gaming platform.

Numbers: The price of Shiba Inu is down 72% in the last 12 months, and is down 5% in the last 30 days.

Final Thoughts: Cryptos are not considered to be solid short-term investments right now because of the volatility.