US stocks closed higher on Monday, with AI-related trading regaining momentum. Trading hours this week will be shortened due to the Christmas holiday. Traders are watching whether tech stocks can regain their upward trajectory before year-end.
The Dow Jones rose 227.79 points, or 0.47%, to 48,362.68. The Nasdaq gained 121.21 points, or 0.52%, to 23,428.83, while the S&P 500 climbed 43.99 points, or 0.64%, to 6,878.49.
US markets will close early at 1:00 PM ET on Wednesday and remain shut on Thursday for Christmas.
Key AI stocks broadly advanced following reports that Nvidia is pushing to export its H200 chips by mid-February. AMD is also rumored to secure a major AI chip order. The news lifted shares of Micron Technology and Oracle, among other AI-related stocks.
After recent underperformance, AI stocks rebounded last week. Oracle, previously a laggard, surged after TikTok agreed to sell its US operations to a new joint venture formed by the software giant and private equity firm Silver Lake. Nvidia also staged a strong comeback.
However, investors are closely monitoring whether AI stocks can sustain their leadership through year-end, especially amid concerns over stretched tech valuations and rotation into cheaper sectors.
Additionally, doubts linger over whether the traditional "Santa Claus rally" will materialize.
Justin Bergner, portfolio manager at Gabelli Funds, noted, "A few weeks ago, I thought we were heading into a tough grind into year-end. Now, it feels more like a volatile year-end."
Will McGough, Deputy CIO at Prime Capital Financial, said, "From a market perspective, I don’t see many catalysts for big moves right now, so naturally, everyone’s looking for the Santa rally."
He added that he is watching where markets ultimately settle, particularly as the S&P 500 approaches 7,000. The index has gained about 17% in 2025, following over 24% and 23% gains in 2023 and 2024, respectively.
McGough pointed out that with the index potentially logging a third straight year of 20%-plus gains—a "quite rare" streak—he remains "constructively optimistic" about next year but cautioned investors to brace for potential volatility.
"The market is currently pricing in around 14% earnings growth for 2026-2027, which is a big number," the deputy CIO said. "But there will inevitably be bumps along the way," he continued, noting that the new Fed chair appointment and midterm elections could serve as catalysts for turbulence.
Comments