S&P 500 and Nasdaq 100: Tesla and Nvidia Drive Gains as Year-End Rally Builds

Broad Indexes Gain in Light Holiday Trading

U.S. stocks edged higher on Christmas Eve as markets opened for a shortened session, continuing early-week gains. The S&P 500 rose 0.67%, while the Dow Jones Industrial Average added 184.58 points, or 0.43%. The Nasdaq Composite outperformed with a 0.88% advance.

Trading is expected to remain thin throughout the session, with markets scheduled to close early at 18:00 GMT. Bond markets will follow with a 19:00 GMT close. Markets will remain shut on Wednesday for the Christmas holiday.

Tech and Semiconductors Extend Sector Leadership

Technology stocks continued to drive broader market strength, reflecting ongoing investor interest in growth sectors. On Monday, the S&P 500 climbed 0.7%, while the Nasdaq advanced nearly 1%, reinforcing the leadership of tech and semiconductor stocks. The momentum has positioned the market for a potential Santa Claus rally, as traders look to close out the year on a positive note.

Historically, the S&P 500 has averaged a 1.3% gain during the final five trading days of December and the first two of January, according to the Stock Trader’s Almanac. However, Infrastructure Capital Advisors CEO Jay Hatfield cautioned that the rally may be limited, maintaining a neutral stance as markets approach the year’s end.

Top Movers: Tesla, Amazon, and Nvidia Drive Gains

Tesla jumped 4% in early trading, boosting the Nasdaq Composite. Amazon and Nvidia also gained over 1%, reinforcing the tech-heavy index’s lead.

Meanwhile, American Airlines dipped more than 1% after briefly grounding all U.S. flights due to a technical glitch, underscoring risks to travel stocks during peak holiday periods.

While the Dow added 0.43%, it lagged behind the Nasdaq, reflecting tech’s outsized influence in driving market gains.

Treasury Yields Push Higher, Signaling Economic Concerns

Treasury yields extended their climb, adding to broader market pressures. The 10-year yield rose 3 basis points to 4.613%, the highest since May 30, while the 30-year yield hit 4.808%, reaching levels last seen in April. These increases follow a sharp rise last week after the Federal Reserve signaled fewer rate cuts in 2025.

Hatfield suggested inflation fears may be overstated, citing the dollar’s 6% year-to-date gain as a deflationary force that could counteract price hikes from tariffs. He downplayed inflation risks linked to President-elect Trump’s proposed tariffs, emphasizing that a stronger dollar could neutralize much of the economic impact.

Outlook for Year-End: Can the Rally Hold?

With light trading expected to persist, further gains will depend on the strength of the Santa Claus rally. While seasonal trends point to potential upside, thin liquidity and climbing Treasury yields could cap gains.

A neutral to slightly bullish outlook remains in place, but market enthusiasm is expected to stay measured as investors navigate the final sessions of the year.

More Information in our Economic Calendar.