Holiday Cheer Arrives on Wall Street
As the holiday season kicked into high gear, Wall Street’s main indexes closed on a high note on Tuesday, with megacap and growth stocks leading the charge. The Dow Jones Industrial Average, Nasdaq Composite, and S&P 500 all scored multiple sessions of gains, marking the start of the highly anticipated Santa Claus rally.
Megacap Stocks Take Center Stage
The performance of megacap stocks, which have a significant influence on the market, was a key driver of the indexes’ gains. With reduced trading volumes and few other catalysts, their impact was even more pronounced. All seven megacap technology stocks, including Tesla, which jumped 7.4%, climbed on Tuesday.
Chip Manufacturers Shine
Chip manufacturers also had a stellar day, with Broadcom and Nvidia rising 3.2% and 0.4%, respectively. Arm Holdings recouped most of its losses from the previous day, climbing 3.9%.
Growth Stocks Defy Expectations
Despite elevated U.S. Treasury interest rates, growth stocks continued to rise. Traditionally, higher debt costs would crimp growth stocks, but long-term themes around technology development, including advancements in artificial intelligence, overshadowed any near-term moves in Treasuries.
Fed Rate Cut Provides Boost
The Federal Reserve’s decision to lower interest rates by another quarter point last week provided a boost to the market. While the Fed signaled only two more 25-basis-point reductions next year, investors remained optimistic about the prospects for 2025.
Crypto-Related Stocks Surge
Crypto-related stocks traded higher on Tuesday, with Microstrategy, Riot Platforms, and MARA Holdings all climbing between 4.7% and 8.1%, as the price of bitcoin advanced.
NeueHealth Soars on Acquisition News
NeueHealth soared 75% after the healthcare provider announced it would be taken private in a $1.3 billion deal.
American Airlines Recovers
American Airlines’ shares edged up 0.6% after trading lower for much of the session, following a brief grounding of all its flights in the United States due to an unspecified technical issue.
Market Outlook Remains Positive
According to Charlie Ripley, senior investment strategist for Allianz Investment Management, the themes that drove the market higher in the past two months remain intact, and actions by the Fed have not killed the rally. “Heading into 2025, things are set up with good positioning,” he said, citing factors including the economic outlook, consumption in the U.S., and the labor market.
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