Technology heavyweights drive Wall Street: A holiday performance par excellence

Driven by remarkable gains from technology giants, the major US stock indices ended trading significantly higher on Tuesday. In a shortened session before Christmas Eve, megacap and growth stocks shone, creating an excellent market sentiment. The Dow Jones Industrial Average and the Nasdaq Composite recorded gains for the fourth consecutive day. For the S&P 500, this day marked the start of the traditionally strong "Santa Claus Rally." This positive development temporarily overshadowed concerns about the recent series of losses, which had given the Dow its longest slump since 1974. The impact of megacap stocks on the markets is particularly striking at present. Their strong performance is driving up prices during the calm holiday period when many market participants are taking breaks. Particularly noteworthy was the success of the so-called "Magnificent Seven" of the tech world: Tesla led the way with a remarkable jump of 7.4%. Tesla's price increase, the company's best daily gain in six weeks, helped the consumer goods sector of the S&P 500 to a 2.6% rise, making it the strongest sector of the day. All other 11 sectors also closed in positive territory. Gains among semiconductor manufacturers also deserve mention. Broadcom and Nvidia increased by 3.2% and 0.4%, respectively. Arm Holdings also recovered by 3.9% after taking losses the previous day due to an unsuccessful court hearing. This impressive performance of growth stocks occurred despite continued high interest rates of US Treasury bonds. The 10-year bond yielded at its highest level since May with 4.61%. However, the long-term prospects in the technology sector, particularly in the area of artificial intelligence, seem to overshadow current interest rate movements, explained Charlie Ripley of Allianz Investment Management. Ultimately, the positive stock market close demonstrates that a robust development of technology stocks remains conceivable in the coming year. The events surrounding the reduction of the key interest rate by the US Federal Reserve, which is limited to only two further rate cuts for 2025, were also reflected in investor sentiment. The S&P 500 rose by 1.10% to 6,040.04 points, while the Nasdaq Composite increased by 1.35% to 20,031.13 points. The Dow Jones Industrial Average gained 0.91% and reached 43,297.03 points. Trading on the stock exchanges ended at 1:00 PM ET and paused the following Christmas Day.