Trading activity resumed after the Christmas holiday, with March S&P 500 E-Mini futures (ESH26) trending down by 0.03%. Market volumes remain subdued as investors prepare for a shortened trading week leading into the New Year. On Wednesday, Wall Street’s three primary equity benchmarks closed higher, with the S&P 500 reaching a new record high.
Nike (NKE) was the standout performer, climbing over 4% following regulatory disclosures revealing that Apple CEO Tim Cook purchased 50,000 shares of the sportswear giant. Several semiconductor stocks also advanced, with Micron Technology (MU) gaining more than 3% to lead the Nasdaq 100. Additionally, Lam Research (LRCX) experienced a rise of over 1%.
In a major corporate development, Dynavax (DVAX) saw its shares jump more than 38% after Sanofi announced plans to acquire the vaccine maker for approximately $2.2 billion. Conversely, Intel (INTC) faced pressure, slipping about 0.5% after reports from Reuters indicated that Nvidia had halted testing of Intel’s manufacturing process for advanced chips.
Economic Indicators and Market Sentiment
The U.S. Labor Department reported a decrease in initial jobless claims, which fell by 10,000 to 214,000, compared to the expected 224,000. As traders analyzed this economic data, they maintained their outlook for the Federal Reserve, anticipating two quarter-point rate cuts in the upcoming year. Current U.S. rate futures reflect an 84.5% probability of no rate change and a 15.5% chance of a 25 basis point cut at the January monetary policy meeting.
“The stock market is finally starting to eke out some gains for December after a choppy few weeks, just in time for the market’s Santa Claus rally,” said Paul Stanley at Granite Bay Wealth Management.
The term “Santa Claus rally” refers to the historical increases observed in the stock market during the final five trading days of December and the first two of January. Since 1950, the S&P 500 has averaged a return of 1.3% during this period, with gains occurring 78% of the time, according to Adam Turnquist at LPL Financial.
Global Market Developments
In international news, China’s foreign ministry announced sanctions on 10 individuals and 20 U.S. defense firms, including Boeing’s St. Louis unit, in response to arms sales to Taiwan. These measures freeze any assets held in China and prohibit domestic entities from conducting business with the sanctioned parties.
Asian stock markets reported positive performances, with China’s Shanghai Composite Index (SHCOMP) closing up 0.10% and Japan’s Nikkei 225 Stock Index (NIK) rising 0.68%. The Shanghai index has extended its winning streak to eight sessions, benefiting from a strengthening yuan, which reached its strongest official close in 2.5 years on Thursday.
The appreciation of the yuan is anticipated to enhance foreign interest in yuan-denominated assets, potentially pushing valuations higher and improving interbank liquidity, as noted by Huatai Securities.
Additionally, Goldman Sachs Research indicated that China’s central bank may consider monetary easing in the near future, reflecting a more accommodative tone in its recent fourth-quarter monetary policy meeting statement.
Turning to Japan, the Nikkei 225 closed higher, buoyed by gains in technology and healthcare stocks. Government data released showed that core consumer inflation in Tokyo eased in December due to moderating food costs, yet remained above the Bank of Japan‘s 2% target, suggesting further monetary tightening may be needed. According to analysts at Barclays, the BOJ is expected to raise rates in July and December of 2026.
Furthermore, Japan’s cabinet approved a record initial budget of approximately $785 billion for the next fiscal year, aiming to balance proactive fiscal policies with concerns over rising national debt. The plan includes a slight increase in government bond issuance, which will see marginal growth from this year’s 28.6 trillion yen to 29.6 trillion yen.
Amidst these developments, the yield on the benchmark 10-year U.S. Treasury note rose to 4.151%, up 0.51%. Most major European markets remain closed due to the holiday break, while the U.S. economic data slate appears empty for the day.
As the markets continue to react to these factors, investors will closely monitor upcoming economic indicators and corporate earnings that could shape market dynamics in the New Year.