A year-end rally in U.S. equities gathered momentum as investors positioned for potential gains in 2026, even as trading activity thinned during the holiday-shortened week.
At the opening bell, the S&P 500 climbed 0.5% to 6,870.10, extending Friday’s 0.9% advance, which marked its strongest session in nearly a month. The Nasdaq 100 rose 0.7%, building on last week’s rebound in technology shares, while the Dow Jones Industrial Average gained about 0.5%.
Looking ahead, only a limited number of U.S. economic releases are scheduled, including a delayed third-quarter GDP report later in the day. However, the data is backward-looking and reflects conditions prior to the government shutdown, limiting its market impact.
Greater attention is expected to focus on December consumer confidence figures from the Conference Board, particularly after sentiment fell in November to its weakest level since market turbulence surrounding Liberation Day in April. Beyond that, the economic calendar remains relatively light.
Tech stocks in focus amid renewed AI optimism
Wall Street ended last week on mixed footing. The S&P 500 edged higher by roughly 0.1%, while the NASDAQ Composite rose about 0.5%, supported by gains in large-cap technology and semiconductor stocks. In contrast, the Dow Jones Industrial Average declined approximately 0.7% over the week.
Trading conditions are expected to remain subdued as U.S. markets operate on a shortened holiday schedule. Wall Street will close early on Wednesday and remain closed on Thursday for Christmas Day, a pattern that typically reduces volumes and can amplify price movements.
Technology shares attracted renewed attention after chipmaker Micron Technology issued an upbeat outlook, reviving enthusiasm for AI-related stocks. The forecast helped ease concerns around stretched valuations, heavy capital requirements, and questions over whether demand growth could sustain elevated prices.
Shares of Oracle also advanced last week following reports that TikTok agreed to sell its U.S. operations to a new joint venture, with Oracle expected to play a central role in providing cloud and data infrastructure services. The news boosted Oracle and added momentum across major technology stocks.
The rebound underscored ongoing confidence that demand for advanced chips remains robust, even as investors continue to scrutinize valuations across the sector.
Fed rate-cut expectations lift sentiment
Broader market sentiment was further supported by last week’s U.S. inflation data. A softer-than-expected consumer price index reinforced expectations that the Federal Reserve could begin cutting interest rates sooner in 2026. The data pushed U.S. Treasury yields lower, providing an additional boost to equities.
Michael Gapen, an economist at Morgan Stanley, said that if the unemployment rate continues to rise, the Fed may be compelled to lower policy rates. Otherwise, rate cuts could come later in 2026, once inflation pressures clearly ease.
Investors are also closely monitoring developments surrounding the Fed’s upcoming leadership transition. With Chair Jerome Powell’s term ending in May and U.S. President Donald Trump interviewing potential successors, markets are parsing policy signals for clues on the future path of interest rates and monetary strategy.
