The stock market continued to enjoy a Santa Claus rally on Thursday, with trading ending at 1 p.m. EST and the market closed on Friday for the Christmas holiday. But traders didn't wait to get into the festive spirit, generating modest gains for most major market benchmarks. As of 10:45 a.m. EST, the Dow Jones Industrial Average (DJINDICES:^DJI) was up 38 points to hit 30,168. The S&P 500 (SNPINDEX:^GSPC) gained 9 points to reach 3,699, and the Nasdaq Composite (NASDAQINDEX:^IXIC) was higher by 55 points to hit 12,826.
As good a day as it was for the markets overall, there was still some news that sent individual stocks lower. Alibaba Group Holding (NYSE:BABA) in particular got bad news, as the Chinese internet giant faces criticism from its home country's government. Meanwhile, XL Fleet (NYSE:XL) gave up some ground, reversing course from the electric-vehicle specialist's recent gains.
Is Alibaba a monopoly?
Shares of Alibaba Group Holding plunged more than 14% Thursday morning, taking nearly $100 billion in market cap off the value of the stock. The internet company faces an investigation from Chinese government officials over whether Alibaba is acting with monopoly powers.
Alibaba revealed before the market opened that it had received a notice of investigation from the State Administration for Market Regulation of the People's Republic of China. The notice indicated that the Chinese regulatory agency had started an investigation under antimonopoly laws within the country. Alibaba will actively cooperate with Chinese officials, and it doesn't anticipate any effect on operations.
Companies operating in China have always had to be cautious in their dealing with the national government, which retains substantial control over markets in the world's most populous country. However, many investors have focused their concerns on U.S. companies trying to work with the Chinese government rather than acknowledging the potential regulatory threat that domestic companies like Alibaba would face.
Alibaba has indeed made huge inroads into the e-commerce market in China. But with so many other big players in the industry, it's tough to conclude that the Chinese tech stock is anything close to a true monopoly.
XL puts on the brakes
Elsewhere, shares of XL Fleet were lower by 9%. The newly public stock gave back some ground after a huge move higher on Wednesday.
Until earlier this week, XL Fleet was a privately held company, but it had entered into an agreement with special-purpose acquisition company Pivotal Investment II to merge. As recently as last Friday, shares of the SPAC traded at just over $15 apiece.
Shareholders approved the deal as anticipated on Monday. That helped start an upward move for the shares. When XL Fleet started trading under the XL ticker symbol on the New York Stock Exchange, the stock erupted, soaring more than 85% on Wednesday. In that light, today's declines are inconsequential.
XL Fleet is taking a novel approach to the red-hot EV industry. It takes existing commercial and municipal vehicles with internal combustion engines and transforms them into electric hybrid vehicles. It's made ambitious plans to add all-electric vehicles and charging station infrastructure in the future.
Electric vehicles are all the rage, so it's no surprise to see XL having posted such huge gains. Still, investors need to be ready for the occasional day when they don't see a surge in share prices.