Wall Street’s main indexes ended higher on Monday, with the Nasdaq Composite and Dow Jones Industrial Average notching their third consecutive gains. The rally was aided by gains in several of the so-called “Magnificent Seven” tech stocks, including Meta Platforms, Nvidia, and Tesla, which rose between 2.3% and 3.7% on the day. The tech sector was buoyed by lower trading volumes due to the holiday week, as investors took a breather. As a result, the stocks that typically set the tone for the market – known as “megacap stocks” – had an outsize influence.
Eight of the 11 S&P sectors closed higher, with the communication services sector leading the charge with a gain of 1.4%. The performance is a reflection of the dominant trend in the market this year, with technology and tech-enabled stocks remaining a bright spot for investors.
Many on Wall Street expect the recent uptrend to continue, even after a disappointing selloff triggered by a slowing pace of rate cuts expected from the Federal Reserve. Some argue that interest rate expectations will no longer influence stock prices to the same degree.
The final week of the year is traditionally a strong period for U.S. stocks, known as the “Santa Claus Rally.” History shows that since 1969, the period between the last five trading days of the year and the first two days of the following year have yielded an average S&P 500 gain of 1.3%. The conditions seem to be right for such a rally, as many investors have enjoyed strong returns this year and are likely to hold onto their positions rather than booking losses and paying taxes.