Nasdaq 100 and S&P500: Tesla, Broadcom Gains Fuel Bullish Sentiment Before Christmas Break

Did Megacap Stocks Drive Wall Street Higher?

Wall Street’s main indices posted gains during a shortened trading session ahead of Christmas, lifted by strong performances in megacap and growth stocks. Light holiday trading volumes allowed these heavyweight stocks to exert outsized influence, propelling the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average higher.

Tesla led the charge with a 5.1% jump, pushing the Consumer Discretionary sector up 1.9%, the day’s top-performing sector. All members of the so-called “Magnificent Seven” posted gains, reinforcing bullish sentiment in the absence of significant economic data.

Which Sectors Led the Gains?

Technology stocks added 0.72%, driven by Broadcom (+3%) and Nvidia (+1.1%). Chipmaker Arm Holdings rose 3.9%, recovering ground lost in the previous session. Energy, financials, and communication services also saw steady advances, while the health sector lagged with a modest 0.29% gain.

Sector highlights included:

Consumer Discretionary: +2.35% to 1,922.75

Financials: +1.13% to 815.73

Energy: +0.77% to 647.82

Meanwhile, NeueHealth surged 69% following a $1.3 billion buyout offer, while American Airlines slipped 0.4% after briefly grounding flights due to technical issues.

What’s Driving Market Sentiment?

Traders appear optimistic about cooling inflation and the Federal Reserve’s dovish pivot. The Fed’s recent rate cut, coupled with softer inflation readings, is easing concerns about potential rate hikes in 2025. Investors are increasingly betting on fewer rate cuts next year, with CME’s FedWatch tool now pricing in a year-end rate range of 4% to 4.25%.

The market is also entering the “Santa Claus rally” period, historically associated with gains in the final days of December and early January. The S&P 500 has averaged a 1.3% rise during this stretch since 1969.

Can the Rally Hold into the New Year?

While bullish momentum persists, questions linger over whether U.S. stocks can maintain record highs. Valuation concerns and broader economic uncertainties could temper gains. However, as holiday trading volumes remain thin, megacap strength may continue to guide indices higher through year-end.

Short-Term Forecast

The market outlook leans bullish as investors digest favorable inflation data and Fed policy signals. However, traders should watch for potential volatility, especially in tech and discretionary sectors, as the year closes.

More Information in our Economic Calendar.