The Week that Was: December 27 to December 31

Kevin Davitt
January 3, 2022

A concise weekly overview of the U.S. equities and derivatives markets

Last week (December 27 – December 31), the “Santa Claus Rally” continued, albeit at a slower pace in the final week of December. The Dow Jones Industrial Average led last week, followed by the S&P 500 Index. The tech-heavy Nasdaq 100 Index lagged, but still finished slightly positive. Trading volume in both equities and options was light, which is typical for the end of the year. In terms of weekly sector performance, Real Estate, Utilities and Materials led while Information Technology and Communication Services lagged.

The market appeared to discount the significant increase in COVID-19 cases. Data out of South Africa, where the first cases of the Omicron variant were detected, showed infection rates declining significantly following the wave of illnesses. The Centers for Disease Control (CDC) reduced its recommended quarantine period for infected, asymptomatic people from 10 days to five. 

Meanwhile, weekly jobless claims fell to 50-year lows and consumer spending and manufacturing data remained strong. MasterCard reported that December sales were up 8.5% year-over-year and up 10.7% relative to December 2019. Interest rates were relatively stable, with the 10-year U.S. Treasury yield around 1.50% and the 30-year at 1.90%.

Big picture, in 2021, the S&P 500 Index gained 26.9%, the Dow Jones Industrial Average gained 18.7%, the Nasdaq Composite gained 21.4% and the Russell 2000 Index gained 13.7%. U.S. large caps and commodities had a banner year, up 29% and 27% respectively. Emerging market equities (down 3.0%) and International bonds (down 7.0%) were the weakest corners of the market in 2021.

Quick Bites


  • U.S. Equity Indices finished the year on a positive note, with all of the major equity indices advancing in the last week of 2021. 
  • S&P 500 Index (SPX®): Increased 0.85% week-over-week. The S&P 500 Index gained 26.9% in 2021.
  • Nasdaq 100 Index (NDX): Increased 0.07% week-over-week. The Nasdaq 100 Index gained  27.12% in 2021.
  • Russell 2000 Index (RUT℠): Increased 0.17%. week-over-week. The Russell 2000 Index gained  14% in 2021.
  • Cboe Volatility Index (VIX™ Index): Measured between 19.41 and 16.62 last week and ended the week at 17.22.


  • SPX options average daily volume (ADV) was 1.26 million contracts per day, below the previous week’s average of 1.43 million contracts per day. The one-week at-the-money (ATM) SPX options straddle (4770 strike with an 1/7 expiration) implies a +/- range of about 1.2%.
  • VIX options ADV was about 280,000 contracts last week, which was lower than the previous week’s ADV of 500,000 contracts. The VIX options call-put ratio was 1.7:1.
  • RUT options ADV was 33,700 contracts, down from the previous week’s ADV of 47,100.

Across the Pond

  • The Euro Stoxx 50 Index increased 0.7%.
  • The MSCI EAFE Index (MXEA℠) increased 0.9% week-over-week and the MSCI Emerging Markets Index (MXEF℠) increased 1.0% week-over-week.

Charting It Out

Observations on VIX futures term structure

  • The VIX Index declined by 0.74 week-over-week  and closed at 17.22. In December, the VIX Index ranged between 35.32 (December 3) and 16.62 (December 30).
  • The VIX futures term structure remains in steep contango. The Month-1/Month-2 spread moved from 1.65-wide to 2.30-wide during the last week of the year.
  • January VIX futures (Month-1) fell 2.00 handles last week and the February VIX futures (Month-2)  declined by 1.35.

VIX Futures Term Structure

Source: LiveVol Pro

Macro Movers

  • 10-year U.S. Treasury yields ranged between 1.46% and 1.56% last week and ended the week at 1.51%, up 2 basis points. 
  • The 30-year U.S. Treasury yield was unchanged at 1.91%. The 2-year U.S Treasury yield moved from 69 basis points up to 74 basis points. UST futures (5Y, 10Y and 30Y) were all slightly lower week-over-week.
  • The minutes from the previous Federal Open Market Committee (FOMC) meeting will be released this week and provide more color on the Fed’s forecast and dot-plot. The market currently expects two or three 25-basis point hikes in the coming year. 
  • The S&P GSCI gained 0.6% last week. Crude Oil gained 6.7%. Copper was higher by 3.9% and Gold futures added 1.4%. Oats and Coffee futures declined.
  • The U.S. Dollar Index (DXY) fell to the lowest level since mid-November.
  • It was a relatively quiet week for Big Tech in the markets. Amazon and Alphabet both declined less than 3%. Tesla lost 1%. Apple and Facebook were both fractionally higher.
  • Apple closed 2.8% below the point where the company would be worth $3 trillion.  

Major Cryptos


  • Last week, Bitcoin (BTC) traded between $52,000 and $46,000. BTC peaked midday on Monday and bottomed late Thursday, ending the week at $46,000, down 9.3%. 
  • Since the early December selloff, BTC has been relatively rangebound. BTC gained approximately 63% in 2021.
  • Despite its very strong annual performance, BTC fell from approximately 70% of the digital asset market (capitalization) at the end of 2020 to approximately 40% at the end of 2021.


  • Ethereum (ETH) prices followed a similar pattern to Bitcoin. ETH ranged between $4,100 and $3,600 last week. ETH ended the week around $3,600, down 10.9%. 
  • ETH gained 415% in 2021 and closed the year about 22% off all-time highs. ETH constitutes approximately 18% of the overall crypto market. 

Digital Asset Industry

  • The government of Mexico announced plans to issue a new Central Bank Digital Currency (CBDC) by 2024, joining Peru and Brazil, which have similar plans.
  • Gibraltar, a British territory off the coast of Spain, is looking to become home to a significant amount of Europe’s cryptocurrency trading. The Gibraltar Stock Exchange (GSX) could be taken over by a blockchain firm called Valereum, which would make GSX the first “integrated bourse.”


  • The 7-day average COVID-19 infection rate in the U.S. increased dramatically in December. The average at the end of November was approximately 84,000 cases per day, compared to approximately 345,000 cases per day in December. 
  • 62% of the U.S. population is fully vaccinated against COVID-19 and 73% have received at least one dose of a COVID-19 vaccine. For just those 12 years and older, the numbers are 71% and 84% respectively.
  • Urban areas have been hit hard by the COVID-19 Omicron variant. Washington D.C., New York, Chicago, Miami and Atlanta are all enduring surges. Hospitalizations have also increased, but at a less concerning rate. Nevertheless, the health care system is under duress in a number of areas.
  • Globally, the 7-day average has seen exponential growth. The average moved from approximately 435,000 cases per day in late November to 1.2 million cases per day currently. 

COVID-19 Cases in the U.S.

Source: The New York Times

Tidbits from the News

  • The S&P 500 Index has closed above its 200-day moving average for more than 400 trading sessions. The large cap index last closed below its long-term moving average in late June 2020. It’s currently the fourth longest run above the 200-day Simple Moving Average (SMA) ever. The period between late June 2016 and early October 2018 has the top spot in terms of S&P 500 Index time above the 200-day SMA (577 trading days).

S&P 500 ETF Longest Closing Streaks Above 200-Day Moving Average

Source: Charlie Bilello

  • Of the roughly 1,058 companies that went public in 2021, about 24% were profitable, which is higher than the full-year numbers in 2018 and 2020. It’s been almost a decade (2012) since more than half of the companies that had Initial Public Offerings (IPOs) in the year were profitable in the same year. Historically, a small percentage of IPOs dramatically outperform relative to the broad market. More than 60% of IPOs lag index performance by more than 10% after three years.

Profitable IPOs Each Year

Source: Jay Ritter and Chartr

  • 2021 was the S&P 500 Index’s sixth best year since 1990. The S&P 500 Total Return Index was up 103% between 2019 and 2021. The last full year decline for the broad market occurred in 2018. The largest decline from highs last year was 5.2%. Only 1993, 1995 and 2017 had smaller peak-to-trough declines during a calendar year.

S&P 500 Index Performance 1990 - 2021

Source: FactSet and Edward Jones

The Week Ahead

Data to be released this week: Construction Spending on Monday; ISM Manufacturing Index on Tuesday; ADP Employment and FOMC Meeting Minutes on Wednesday; Initial Jobless Claims, ISM Services Index and Trade Deficit on Thursday; Nonfarm Payrolls and Consumer Credit on Friday.

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