U.S. Stocks End Higher as Tech Rebound Lifts Markets in Holiday-Shortened Week

BY COMFORT OGBONNA

U.S. stocks closed higher on Monday to begin a holiday-shortened trading week, supported by a renewed rally in technology shares and broad-based gains across most sectors of the market. The upbeat session saw advances in nearly all 11 sectors of the S&P 500, reflecting improving investor sentiment as the year draws to a close and markets look ahead to a traditionally strong seasonal period.

The rebound in technology stocks, which gathered momentum late last week, was fueled by strong corporate outlooks and easing inflation pressures. Optimism around the sector intensified after Micron Technology delivered robust forecasts, reinforcing confidence in demand for memory chips tied to artificial intelligence and data center expansion. A cooler-than-expected U.S. inflation report also helped ease concerns about interest rates, pushing the S&P 500 and the Dow Jones Industrial Average to within 1% of their record closing highs set earlier this month.

Nvidia shares rose and provided the largest single boost to the S&P 500. Reports that the company plans to begin shipping its second-most powerful artificial intelligence chips to Chinese customers ahead of the Lunar New Year added to enthusiasm surrounding the stock and the broader AI theme. Micron climbed 4%, while gains across other chipmakers lifted the Philadelphia Semiconductor Index by 1.1%, underscoring the renewed strength in the sector.

Market participants, however, remained cautious about the sustainability of the rally. Ken Polcari, partner and chief market strategist at Slatestone Wealth in Jupiter, Florida, said the market may continue to move sideways in the near term. He noted that while stocks traded higher on Monday, intermittent pullbacks would not be surprising before another push higher, suggesting a choppy but constructive path into year-end.

The Dow Jones Industrial Average rose 227.79 points, or 0.47%, to close at 48,362.68. The S&P 500 gained 43.99 points, or 0.64%, ending at 6,878.49, while the Nasdaq Composite added 121.21 points, or 0.52%, to finish at 23,428.83.

December has historically been a favorable period for equities, often marked by the so-called Santa Claus rally. Since 1950, the S&P 500 has risen by an average of 1.3% during the final five trading days of the year and the first two sessions of January. This year’s window begins on Wednesday and runs through January 5, keeping investors attentive to whether seasonal trends will once again hold.

Strong optimism surrounding artificial intelligence, evidence of a resilient U.S. economy, and expectations that the Federal Reserve may begin easing monetary policy have outweighed lingering concerns over U.S. tariffs. These factors have helped put the three major U.S. indexes on track for a third straight year of gains, with the S&P 500 up about 17% so far this year.

Most sectors ended the session in positive territory. Materials rose 1.4% and energy gained 1.1%, benefiting from a jump in commodity prices. The technology sector added 0.4%, while financials climbed 1.3% to close at a record level, highlighting continued strength in banks and insurers.

Wall Street’s volatility gauge, the CBOE Volatility Index, fell to its lowest closing level since mid-December 2024, ending at 14.08, signaling subdued investor anxiety. Trading volumes were relatively light and are expected to thin further as the Christmas holiday approaches. U.S. markets will close early at 1 p.m. ET on Wednesday and remain shut on Thursday. Total volume on U.S. exchanges was 14.57 billion shares, below the 20-day average of 16.9 billion.

Despite the holiday slowdown, several key economic releases are scheduled this week, including a preliminary reading of third-quarter GDP, December consumer confidence figures, and weekly jobless claims. These reports are expected to provide fresh insight into the strength of the U.S. economy and potential clues about the future path of monetary policy. Polcari noted that the upcoming GDP report may be the final major data point investors focus on before year-end.

Among individual stocks, Tesla gained 1.6% after the Delaware Supreme Court restored CEO Elon Musk’s 2018 pay package. Warner Bros. Discovery advanced 3.5% after Oracle co-founder Larry Ellison agreed to provide a personal guarantee for a large equity financing tied to a takeover bid for Paramount, whose shares rose 4.3%. Clearwater Analytics Holdings jumped 8.1% after a group of private equity firms agreed to acquire the company in a deal valued at about $8.4 billion, including debt.

Market breadth was positive, with advancing stocks outnumbering decliners by more than two to one on the New York Stock Exchange and by roughly 1.6 to one on the Nasdaq. The S&P 500 recorded 42 new 52-week highs and five new lows, while the Nasdaq Composite posted 113 new highs and 128 new lows, reflecting selective but broad participation in the rally.