Dow Jones futures were little changed Thursday morning following market closures for the Christmas holiday, with the S&P 500 and Nasdaq futures also showing minimal movement. The stock market rally continued its advance, particularly during the half-day Christmas Eve session, led by the Nasdaq, moving closer to record highs. The S&P 500 regained ground above 6,000, although many sectors still appear lagging. This period marks the unofficial Santa Claus rally, encompassing the last five trading days of the year and the first two sessions of the subsequent year.
Dow Jones futures show little change after Christmas holiday
The stock market saw broad gains on Tuesday, with the Dow Jones Industrial Average rising 0.9%, approaching the 50-day line. The S&P 500 index increased by 1.1% and moved back above its 21-day line. The Nasdaq composite jumped 1.35% for the third consecutive session, nearing previous record highs. Despite the positive momentum, small-cap stocks, such as the Russell 2000, lagged, only increasing by 1% and remaining distant from its 50-day line.
Investors focused on technology stocks benefited from strong performances in several key companies. Nvidia (NVDA) registered a buy signal after breaking through critical levels, although it fell from intraday highs. Meanwhile, fellow AI chip makers Broadcom (AVGO) and Astera Labs (ALAB) demonstrated significant advancement, with Broadcom’s stock rising 3.15% and continuing its ascent towards record highs amid a notable 48% surge this December.
Tesla (TSLA) demonstrated resilience, progressing 7.4% to 462.28 after rebounding from a prior modest pullback. The electric vehicle manufacturer is on track for a record delivery quarter, thanks in significant part to robust sales in China. Investors maintain optimism regarding Tesla’s developments in self-driving, AI, and robotics, alongside anticipated favorable policy moves from the Trump administration that support key advisor Elon Musk.
Most global stock markets were closed for the Christmas holiday, with many, including European markets and Hong Kong, expected to remain closed on December 26. As trading resumed, Dow Jones futures were down by 0.2% relative to fair value, while S&P 500 futures showed little movement, and Nasdaq 100 futures edged up by 0.1%. The 10-year Treasury yield experienced a slight increase, rising to 4.61%. Despite rising yields, the S&P 500 and Nasdaq have maintained upward momentum, although this upward movement may be a contributing factor to why the Dow, Russell, and various equal-weighted ETFs are failing to break above their 50-day lines.
Investors are also closely monitoring Exchange-Traded Funds (ETFs) during this bullish market phase. The Innovator IBD 50 ETF (FFTY) advanced by 2.3%, while the iShares Expanded Tech-Software Sector ETF (IGV) increased by 1.15%. The VanEck Vectors Semiconductor ETF (SMH), which prominently features Nvidia, saw a 0.9% rise. The performance of ARK Invest’s ETFs also saw gains, with the ARK Innovation ETF (ARKK) climbing 2.9% and the ARK Genomics ETF (ARKG) increasing by 0.9%. Market sentiment remains robust, as indicated by the CBOE Volatility Index, which has dropped significantly since spiking to a four-month high last week.
Moving forward, Nvidia stock appears to be in a position for potential gains, having retaken the 50-day line and broken a short-term downtrend following a recent low of 126.86 on December 17. Market analysts project that Nvidia could form a shallow double-bottom base with a 146.54 buy point by the week’s end. While Nvidia leads in the AI chip sector, it is not the sole focus, as Broadcom continues to emerge as a strong contender in the market.
The Dow Jones futures’ muted response after the Christmas holiday signals a cautious yet optimistic market. While the S&P 500 and Nasdaq continue to climb, the lagging performance of small-cap indices and equal-weighted ETFs signals uneven market participation. This divergence could pose risks if market breadth fails to improve in the coming sessions. As Nvidia aims to form a new base, with analysts eyeing a 146.54 buy point, investors should watch for confirmation of strength before making moves. Balancing exposure between proven leaders like Nvidia and emerging opportunities in ETFs like ARKK and SMH can provide diversification while leveraging current bullish sentiment. The key is maintaining discipline amid the excitement of the Santa Claus rally.
Disclaimer: The content of this article is for informational purposes only and should not be construed as investment advice. We do not endorse any specific investment strategies or make recommendations regarding the purchase or sale of any securities.
Featured image credit: Kerem Gülen/Midjourney
