Santa Rally or Trump Bump? Nasdaq Soars on Broadcom, Tesla as Dow Slips.

Santa Claus Rally or Trump Bump: Is the Market Gaining Early Cheer?

With the holiday season fast approaching, the stock market is seeing notable moves, raising the question: Is this the Santa Claus rally arriving early, or are markets still benefiting from the Trump Bump following Donald Trump’s election victory? Monday’s trading session highlighted a widening gap between the tech-heavy Nasdaq and the struggling Dow, with clear winners and losers emerging.

Are We Seeing an Early Santa Claus Rally?

The Santa Claus rally traditionally occurs in the final week of December through the first days of January, driven by investor optimism, lighter trading volumes, and holiday bonuses. Yet recent gains, particularly in technology stocks, suggest that seasonal cheer may be arriving early this year.

On Monday, Broadcom (AVGO) led the charge, soaring 11.2% to hit a new all-time high. The chipmaker continues to ride momentum from last week’s strong earnings report, which showcased impressive AI-related sales. Analysts have taken notice, with Bernstein and others naming Broadcom a top semiconductor pick alongside Nvidia (NVDA).

Tesla (TSLA) also surged 6.1% on Monday as analysts at Wedbush emphasized the carmaker’s upside potential in AI and self-driving technology, particularly under a Trump administration expected to ease regulatory hurdles.

Meanwhile, SoundHound AI (SOUN) jumped 16%, closing at a record $19.69. The rally came after Wedbush raised its price target, pointing to robust demand for the company’s AI voice technology solutions across industries.

Nasdaq Up, Dow Down: What’s Driving the Divergence?

While the Nasdaq climbed more than 1% on Monday to set another record, the Dow Jones Industrial Average struggled, falling 0.1% for its eighth consecutive loss—the longest losing streak since 2018. The divergence reflects investor confidence in tech stocks contrasted with caution surrounding other sectors.

Nvidia (NVDA) has officially entered correction territory, down over 20% from its recent peak, as investors digest concerns over its shift to next-generation chips and regulatory headwinds in China. Despite this pullback, analysts remain confident, with firms like Bank of America and Bernstein maintaining bullish price targets, citing Nvidia’s dominant position in the AI revolution.

Oil stocks weighed heavily on the Dow. Phillips 66 (PSX) and Marathon Petroleum (MPC) both slid more than 5% as oil prices dropped in response to weaker-than-expected Chinese consumer spending data.

Healthcare was another weak spot. CVS Health (CVS) fell 5.6% after Trump suggested eliminating “middlemen” to lower prescription drug costs, a blow to pharmacy benefit managers (PBMs).

Super Micro Computer (SMCI) also tumbled 8.3%, the sharpest loss in the S&P 500, after being removed from the Nasdaq 100 index as part of its annual rebalancing.

Is This Still the Trump Bump?

The initial Trump Bump reflected market optimism around Trump’s policies favoring tax cuts, deregulation, and business growth. Those themes remain visible, particularly in tech and AI, where stocks like Broadcom, Tesla, and SoundHound are seeing strong investor interest.

However, the Dow’s struggles reveal a more cautious mood. Concerns about potential trade tariffs, rising deficits, and Federal Reserve policy uncertainty are tempering enthusiasm in sectors like energy and healthcare. Monday’s mixed performance underscores this divide, with tech flourishing while traditional blue chips falter.

Monday’s Clear Winners and Losers

• Winners:
  • Broadcom (AVGO): Up 11.2% on strong AI-driven earnings momentum.
  • Tesla (TSLA): Gained 6.1% on analyst confidence in AI and self-driving growth.
  • SoundHound AI (SOUN): Surged 16% on a bullish price target revision.
• Losers:
  • Super Micro Computer (SMCI): Dropped 8.3% following Nasdaq 100 removal.
  • CVS Health (CVS): Fell 5.6% on Trump’s comments about PBMs.
  • Phillips 66 (PSX) and Marathon Petroleum (MPC): Both down over 5% as oil prices weakened.

Outlook: Rally or Caution Ahead?

While tech stocks have powered the Nasdaq to fresh highs, the broader market is sending mixed signals. Monday’s notable gains in Broadcom, Tesla, and SoundHound suggest strong investor optimism in AI and technology growth, but the Dow’s extended losses highlight lingering caution in traditional sectors.

Whether this is an early Santa Claus rally or lingering effects of the Trump Bump remains to be seen. With the Federal Reserve’s interest rate decision approaching and year-end positioning underway, traders should brace for more volatility before a clearer trend emerges.

More Information in our Economic Calendar.