Dow, S&P 500 hit record highs as Santa rally begins

NEW YORK: US stocks closed higher on Wednesday (Dec 24), with the Dow Jones Industrial Average and the S&P 500 finishing at record levels as a broad-based rally extended into a holiday-shortened session and raised hopes of a traditional year-end “Santa Claus rally”.

All three major indexes posted their fifth straight session of gains, supported by strength in financials and a rebound in artificial intelligence-linked stocks after last week’s sell-off over valuation concerns.

According to preliminary data, the S&P 500 rose 0.32 per cent to end at 6,932.12, while the Nasdaq Composite gained 0.22 per cent to 23,613.31. The Dow climbed 0.60 per cent, adding nearly 290 points to close at 48,731.81.

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Investors were encouraged by signs that the US economy remains resilient. Data released on Wednesday showed new applications for jobless benefits unexpectedly fell last week, easing concerns about labour market weakness.

Markets are still pricing in about 50 basis points of interest rate cuts from the Federal Reserve next year, although expectations for a January cut remain low, according to CME’s FedWatch Tool.

“Yields are behaving, volume is light, but the same issues remain in place – AI is strong,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. He added that optimism around new AI models and a steady economy continued to support sentiment, even as the Fed is seen holding rates steady in the near term.

Trading volumes were thin ahead of the Christmas holiday, with US markets set to remain closed on Thursday.