Obviously you have now realized YTA. If you want to correct the course of things:
Sincerely apologize to your wife and tell you her you fully understand and realize how she feels and that you too feel your stepson is being rejected and your mother’s actions are completely unacceptable. Tell her you will stand with her and your family will not attend unless your mother straightens her approach.
It will then be key to confront your mother, and to do it in a way where she understands that YOU do not find her approach acceptable and YOU will not be bringing your family if she doesn’t put the stocking up. It can’t just seem like you are trying to make the wife happy here when talking to her mom. This is a conflict between you and your mother now, whether you like it or not. That’s the role of a husband and father.
What an incredibly childish thing for your mother to do. I am just in shock more and more at how many people lack decency within their families. There is no maturity here. Disgraceful.