By Sruthi Shankar and Shashwat Chauhan
Dec 22 (Reuters) – U.S. stocks kicked off the holiday-shortened week on a positive note, as technology stocks extended their recent gains on renewed interest in AI-related companies, while investors awaited key economic data later this week.
A rally in tech stocks starting late last week, driven by Micron Technology’s blowout forecasts and a benign inflation report, has left the S&P 500 and Dow less than 1% away from their record closing peak on December 11.
Nvidia shares rose 1.4%. Reuters had reported the company has told Chinese clients it aims to start shipping its second-most powerful AI chips to China before the Lunar New Year holiday in mid-February.
Micron rose 1.8%, while other chipmakers also gained, with the Philadelphia SE Semiconductor Index up 1.2%.
“Despite bouts of volatility and concerns about the health of the AI trade, tech has led the market to the upside this year,” said Chris Larkin, managing director for trading and investing at E*TRADE from Morgan Stanley.
“If a Santa Claus rally does kick in this year, St. Nick’s gift bag will likely need to be full of positive tech sentiment.”
December has traditionally been a strong period for stock markets. Since 1950, the so-called Santa Claus rally has been reflected by the S&P 500 rising by an average of 1.3% over the last five trading days of the year and the first two trading days in January, according to the Stock Trader’s Almanac.
This year, that period starts Wednesday and runs through January 5.
Optimism around AI, signs of a resilient U.S. economy and growing bets of monetary policy easing have overshadowed concerns about U.S. tariffs, helping put the three main indexes on course for their third consecutive year of gains. The S&P 500 is up more than 15% so far this year.
By 11:40 a.m. ET, the Dow Jones Industrial Average rose 0.50% to 48,376.99. The S&P 500 was up 0.59% at 6,874.75 and the Nasdaq Composite added 0.57% at 23,439.28.
Ten of the 11 S&P sectors were trading higher, with materials and energy leading gains as commodity prices jumped. The information technology sector added 0.4%.
Wall Street’s fear gauge, the CBOE volatility index, hit its lowest level since September.
Trading volumes are expected to remain light this week, with U.S. stock market closing at 1:00 p.m. ET on Wednesday and shut on Thursday for Christmas holiday.
However, key economic data, including the preliminary reading of third-quarter GDP, December consumer confidence data and weekly jobless claims, are scheduled for release this week, offering insights about the health of the U.S. economy as well as hints about the monetary policy path.
Among other movers, Tesla jumped 2.4% to an all-time high after CEO Elon Musk’s 2018 pay package was restored by the Delaware Supreme Court.
Warner Bros Discovery rose 3% after Oracle co-founder Larry Ellison agreed to provide a personal guarantee of $40.4 billion of the equity financing for Paramount Skydance’s offer to acquire the company. Paramount’s shares rose 5%.
Clearwater Analytics Holdings jumped 8.3% after a group of private equity firms led by Permira and Warburg Pincus clinched a deal to acquire the investment and accounting software maker for about $8.4 billion, including debt.
(Reporting by Sruthi Shankar and Shashwat Chauhan in Bengaluru; Editing by Krishna Chandra Eluri)
