Christmas Rally: Season Gets Off to a Strong Start
Wall Street's key indexes ended the trading session in positive territory on Tuesday, with large-cap stocks and strong gains in individual sectors helping to shore up the market's fortunes amid a shortened Christmas session.
The Dow Jones Industrial Average and Nasdaq Composite posted their fourth straight day of gains, while the S&P 500 extended its winning streak to three days. The results marked a successful start to the so-called "Santa Claus Rally," the traditional pre-New Year market rally.
Back from a Losing Streak
Recall that earlier this month, the Dow suffered a 10-day losing streak, the longest since 1974. However, the current figures indicate a recovery and growing optimism among investors.
The Magnificent Seven Set the Tone
Special attention was drawn to the mega-cap stocks known as the "Magnificent Seven" on Tuesday. These stock market giants were the main drivers of growth, setting a positive tone for all benchmarks.
Tesla showed the biggest gains: the electric car maker's shares jumped 7.4%, which was the company's biggest one-day gain in the past six weeks. Tesla's gains were also supported by the Consumer Discretionary Index, which ended the day up 2.6%, the largest gain among all 11 S&P 500 sectors.
Seasonal Calm and Confident Moves
Amid reduced trading volumes and limited new economic developments, the influence of large companies on the market is especially noticeable. The holiday season, traditionally accompanied by less investor activity, only underscores the importance of such market "heavyweights".
All sectors ended the day in the green
The result of the day was a positive close for all 11 sectors of the S&P 500 index. Such synchronized growth underscores the market's optimism despite the overall holiday decline in activity.
The Christmas session on Wall Street showed that even during the holiday period, the market is capable of showing confident growth, supported by industry leaders and strategic investor sentiment.
Microchips Regain Lost Ground
The tech sector, particularly chipmakers, showed solid gains amid the holiday lull. Broadcom and Nvidia strengthened their positions, adding 3.2% and 0.4%, respectively. Arm Holdings shares rose 3.9%, recouping most of the losses incurred after an unsuccessful court case the day before.
These figures show investor confidence in the tech sector despite temporary legal and market difficulties.
Interest rates remain high, but that does not scare the market
The rise in the yield on the 10-year US Treasury note to 4.61%, the highest since May, usually puts pressure on the stock market. However, this time the impact was minimal.
Key long-term trends such as the adoption of artificial intelligence and the development of new technology solutions continue to generate optimism, overshadowing short-term market fluctuations. According to Charlie Ripley, senior investment strategist at Allianz Investment Management, the tech sector looks poised to continue its momentum into next year.
Major Indexes Show Steady Gains
All three major indexes ended the shortened trading day with significant gains. The S&P 500 rose 1.10%, adding 65.97 points to close at 6,040.04. The Nasdaq Composite gained 1.35%, up 266.24 points to close at 20,031.13. The Dow Jones Industrial Average rose 0.91%, adding 390.08 points to close at 43,297.03.
Holiday Schedule: Markets Take a Pause
Exchanges closed early on Tuesday, closing at 1 p.m. ET. Stock markets will be closed on Wednesday, Christmas Day, giving investors a chance to analyze the current dynamics and prepare for the next round of trading.
A New Round Starts
Despite the holiday slowdown in trading volumes and high interest rates, the tech sector continues to show confidence, setting the pace for the broader market. A rebound in chipmakers confirms long-term potential, and growing investor optimism signals a readiness for further gains in the new year.
Rally peaks: Wall Street at a crossroads
After a meteoric rise on optimism following the November U.S. election, stocks are facing new challenges. Expectations of pro-business policies under President Donald Trump had sent Wall Street to record highs, but momentum slowed in December on the prospect of interest rate hikes in 2025.
The Federal Reserve, in cutting interest rates for the third time this year, outlined only two future cuts of 25 basis points, down from the four previously forecast. The move sent a signal to investors about the possible impact of the Trump administration's economic policies on inflation.
Optimism remains despite monetary policy changes
Charlie Ripley, senior investment strategist at Allianz Investment Management, emphasized that the key growth drivers of recent months remain relevant. "The market is in great shape heading into 2025," he said, citing a stable economic outlook, strong consumption, and a robust labor market.
Cryptocurrency Is Back in the Spotlight
Cryptocurrency-related stocks posted solid gains on Tuesday. Microstrategy, Riot Platforms, and MARA Holdings all rose between 4.7% and 8.1%, helped by a surge in the price of Bitcoin. The sector continues to attract investors, showing volatility and the potential for big gains.
Health Sensation
NeueHealth soared 75% after announcing it would go private in a $1.3 billion deal. New Enterprise Associates, the company's largest shareholder, and a group of investors are looking to take the company off the public markets, one of the biggest stories of the day.
Looking Forward to the Next Stage
Despite a slowdown in the market rally and the impact of macroeconomic factors, Wall Street remains confident in the strength of its position. Investors continue to look to long-term trends like technology and the rise of the cryptocurrency sector to look ahead to the year ahead.
American Airlines Stock Rises Amid Technical Glitch
After a rocky session that saw all flights temporarily grounded due to a technical glitch, American Airlines shares rose 0.6%. Despite an unspecified cause for the glitch, investors reacted calmly, allowing the company to end the day on a positive note. The gains underscore the market's confidence in the carrier's ability to handle disruptions.
Markets Prepare for the Holidays: Weak Trading, but Steady Gains
Wall Street continued to set the tone for global stock gains on Thursday despite a lackluster trading schedule ahead of the holiday season. The dollar held its own as markets closed early, thanks to high Treasury yields and expectations that the Federal Reserve will slow the pace of interest rate cuts next year.
The US trading day ended at 1pm ET, with bond markets closing an hour later. While US stock exchanges will reopen on Thursday, most of the world's financial centres will continue to celebrate.
Modest Activity: Analysts' View of the Fed
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said the low volume of news and data is keeping market participants focused on the Fed's stance. According to her, the regulator's tighter approach to monetary policy remains the key factor influencing global markets.
Global Indices Show Positive Dynamics
Despite the holiday lull, major global indices showed moderate gains. The MSCI share index rose more than 0.5%, the pan-European STOXX 600 added 0.18%, while the UK's FTSE 100 and France's CAC 40 rose 0.19% and 0.14%, respectively. German markets remained closed for the holidays.
Resilience in the face of uncertainty
Even amid low trading activity and rising macroeconomic concerns, global markets are showing resilience. American Airlines' recovery and a modest rise in global indices indicate that investors are prepared to adapt to changing conditions and remain optimistic despite external challenges.
Record bonds: Beijing's new strategy
Chinese stock markets are showing strong gains after news that the government plans to issue a record amount of special Treasury bonds next year. These measures are aimed at stimulating the economy, which is facing a growth slowdown.
The CSI300 and Shanghai Composite indexes of large companies both gained 1.3%, while Hong Kong's Hang Seng rose 1.1%. This positive signal reflected hopes for a strong recovery in the world's second-largest economy.
More support for consumption
The stimulus plans include more fiscal support. China's Finance Ministry said it would boost funding for pensions, health insurance subsidies and home appliance exchange programs. These measures should strengthen household purchasing power and support the domestic market.
Investors wary amid external risks
Despite the positive news, market participants remain cautious. Threats of high tariffs from the US President-elect Donald Trump's administration remain a significant uncertainty for the Chinese economy. These risks are pushing investors to take more balanced decisions.
Asian markets follow global trend
The MSCI index of Asia-Pacific shares excluding Japan rose 0.37%, reflecting optimism driven by signals from the US Federal Reserve. The Fed's recent 25 basis point rate cut has bolstered confidence in the resilience of the US economy and the slow approach of inflation to the 2% target.
Bets on the Future: 2025 Outlook
Markets continue to assess the Fed's next moves. Investors expect another 35 basis points of rate cuts in 2025, including the possibility of two cuts. These expectations are driving a more optimistic sentiment in the global investment community.
A Positive Outlook on Asia
A rally in Chinese stocks and a positive outlook in the Asia-Pacific region suggest investors continue to bet on a long-term recovery. However, questions remain about global trade relations and the pace of stimulus, making markets more sensitive to macroeconomic cues.
Demand for Treasuries Remains Resilient
U.S. Treasury yields were mixed amid growing interest in the $70 billion five-year note offering. Despite the successful auction, yields remained above daily levels, continuing to reflect market uncertainty.
The two-year note, which is sensitive to changes in Federal Reserve policy, showed a gain of 0.9 basis points to 4.359%. Meanwhile, the yield on the 10-year note reached a seven-month high, rising 2.6 basis points to 4.625%.
The Fed and inflation: new challenges for forecasts
Experts from Citi Wealth said that the US policy on tariffs and immigration, along with changes in the labor market, will be key factors in the Fed's forecasts. "Despite the uncertainty, we maintain our base rate forecast at 3.75%," the analysts noted, emphasizing that this figure is significantly higher than the average rate of 1.7% over the past two decades.
The current position of the rate and the outlook
The Fed cut its key rate for the third time in the cycle, bringing it to the range of 4.25-4.5%. The move signals continued loose monetary policy, but leaves open questions about the regulator's next steps amid mounting pressure on the economy.
Global Banks and Trump's Return: Caution Above All
With Donald Trump expected to return to the White House in January, global central banks are urging a cautious approach. Potential new tariffs, tax reforms, and immigration restrictions could significantly impact economic policy, adding an element of unpredictability to global financial markets.
Balancing Risks and Opportunities
Bond markets continue to react to the Fed's actions and signals from the White House, trying to find a balance between rising yields and political uncertainties. Amid such challenges, investors are focusing on inflation dynamics, labor market developments, and global economic trends.
US Consumers Lose Confidence
Fresh data released on Monday showed that US consumer confidence weakened in December, easing the post-election optimism and raising concerns about future business conditions. The decline surprised analysts and underscored the uncertainty surrounding the country's economic dynamics.
Dollar Strengthens, Currencies React to Pressure
The dollar index rose 0.14%, holding near a two-year high set earlier. The U.S. currency has strengthened more than 2% in December, reflecting steady investor interest.
The euro fell 0.15% to $1.0389, while the yen continued to trade near a five-month low, hitting 157.35 per dollar. Amid instability in currency markets, Japanese Finance Minister Katsunobu Kato reiterated concerns about sharp fluctuations in the exchange rate and warned that the government was prepared to intervene to stabilize the situation.
Precious Metals Continue to Rise
Gold prices continued their upward trend, adding 0.13% to reach $2,616.26 per ounce. The metal has risen by about 27% over the year, demonstrating the most significant increase since 2010. This growth confirms gold's status as a safe haven asset in the face of global uncertainty.
Oil Rises on Resilient Demand
Oil prices also showed confident growth. American WTI crude oil increased by 1.56% to reach $70.32 per barrel. Brent crude oil ended the day at $73.73 per barrel, adding 1.51%. The strengthening of prices is associated with expectations of stabilization of global demand for energy resources.
Markets React to Mixed Signals
Currency, commodity and financial markets continue to adapt to changing economic conditions. Weakening U.S. consumer confidence, a stronger dollar, and rising gold and oil prices highlight the ongoing instability and search for balance in the global economy. Investors are closely monitoring the signals to build a strategy in a dynamic environment.
