U.S. equities traded largely flat on Wednesday as investors approached the final trading session of the year amid thin liquidity and the upcoming New Year’s Day holiday.
The S&P 500 edged up by 2 points to 6,899, while the Nasdaq 100 added 11 points to 25,473 by 09:33 ET. The Dow Jones Industrial Average slipped 15 points to 48,351.
Thin trading and Fed caution weigh on markets
Trading volumes remained subdued as many investors stayed on the sidelines ahead of the holiday break. U.S. bond markets were also scheduled to close early, further limiting activity.
In the previous session, Wall Street closed broadly lower, extending a late-December pullback that has weighed on market sentiment. The S&P 500 finished 0.1% lower, while both the Dow Jones Industrial Average and the Nasdaq Composite declined by 0.2%.
Markets were unsettled following the release of minutes from the Federal Reserve’s December policy meeting. The minutes highlighted divisions among policymakers over the direction of interest rates in 2026.
Although the Fed delivered a quarter-point rate cut at the meeting, some officials signaled growing caution about further easing. Persistent inflation pressures and uncertainty surrounding the economic outlook were cited as key concerns. Other policymakers warned that keeping policy too restrictive for too long could risk slowing economic growth.
Santa Claus rally hopes fade
Expectations for a traditional Santa Claus rally — a period that typically brings gains during the final days of the year and early January — have diminished as stocks drifted lower instead.
Analysts noted that the recent pullback suggests seasonal gains may have arrived earlier than usual. Narrow market leadership and profit-taking after a strong year for major indexes have also weighed on late-year momentum.
With few economic data releases scheduled during the holiday-shortened week, markets are likely to remain driven by technical factors, policy expectations, and year-end portfolio rebalancing.
