Stock Market Rallies Ahead of Christmas Break
As the holiday season approaches, US stocks are ending the year on a high note. In the final trading session before Christmas, the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all saw significant gains, with the tech-heavy Nasdaq leading the way.
Tech Stocks Lead the Charge
Nvidia, the AI chip giant, was a major contributor to the market’s upward momentum, building on its impressive 3.5% gain from the previous day. The company’s stock has had a remarkable year, with a 180% increase in 2024. However, experts warn that 2025 may bring new challenges for the tech industry.
Interest Rates and Inflation
As the Federal Reserve prepares for its January and March meetings, market analysts are reassessing the path of interest rates next year. Despite the Fed’s efforts to achieve a soft landing, inflation remains a significant concern, with core prices still above the central bank’s 2% target. Deutsche Bank’s chief economist, Matthew Luzzetti, predicts a gradual deceleration of inflation, but notes that it will likely remain uncomfortably high for the Fed.
Economic Forecasts
The Fed’s Summary of Economic Projections (SEP) sees core inflation hitting 2.5% next year, higher than its previous projection. Wall Street’s current projections align with this forecast, with most economists surveyed by Bloomberg expecting core PCE to moderate to 2.5% in 2025.
Company Spotlight: Spotify
Spotify’s remarkable turnaround is a testament to the company’s intense business overhaul. After a disastrous 2022, the audio giant has seen its stock price soar, with a market cap of $100 billion. CEO Daniel Ek attributes the company’s success to outstanding execution and a steady path toward achieving long-term goals.
Mergers and Acquisitions
President Biden is set to decide the fate of Nippon Steel’s $15 billion bid for US Steel, which has been referred to him by the Committee on Foreign Investment in the US (CFIUS). Meanwhile, shares of US Steel Corporation edged higher, rising just under 1%.
Cryptocurrency Update
Bitcoin, one of the biggest beneficiaries of the post-election rally, rose over 5% to trade above $98,000 a coin. Ethereum and other cryptocurrencies also saw significant gains, with investors and analysts remaining mostly bullish heading into 2025.
The Santa Claus Rally
Historically, the stock market has seen gains from the last five trading sessions of December through the first two trading days of January. With all three major indexes trading firmly in the green, markets are embracing the Christmas spirit. The tech-heavy Nasdaq led the way higher, up about 1%, with Tesla, Arm Holdings, and Broadcom seeing the largest gains within the index.
Other Market News
American Airlines briefly grounded all flights nationwide due to a technical issue, but the FAA lifted the ground stop at around 8 a.m. ET. Shares initially fell over 5% in premarket trading but have since recovered most of those losses.
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