The S&P 500, Dow and Nasdaq are near record highs and are set for their second consecutive year of gains.
A rally in technology stocks on expectations that the Federal Reserve will cut interest rates by nearly 100-basis points in 2024 and that artificial intelligence will boost corporate profits has pushed equities to record highs in 2024.
Tech, communications services and consumer discretionary stocks have advanced more than 30% this year.
Although AI poster-child Nvidia’s jump of more than 170% this year was smaller than last year, the rally helped push the company to a $3 trillion market value, while Tesla reclaimed the $1 trillion level.
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At 09:53 am, the Dow Jones Industrial Average was up 79.15 points, or 0.19%, at 42,652.88, the S&P 500 was up 7.91 points, or 0.13%, at 5,914.28 and the Nasdaq Composite was up 96%, at 90%. 19,497.96.
Nvidia was down 0.5%, while the Elon Musk-led automaker added 1.1%. Movements are expected to be affected by thin volumes ahead of the New Year holiday on Wednesday.
Most of the 11 S&P 500 sectors traded higher, led by energy stocks on higher crude prices.
Towards the end of the year, Donald Trump’s presidential victory boosted bets that he would make good on his promises to ease regulations, cut taxes and raise tariffs to help local businesses.
His win also boosted small-cap stocks. The Russell 2000 hit a record high and was set for a second straight year of gains with gains of nearly 10%. The bank’s shares are up nearly 35% this year.
However, equities hit a rough patch in December, putting the S&P 500 on course for its biggest monthly decline since April due to higher yields on Treasury notes at a time when equity valuations are stretched and the Fed is cautious.
The yield on the benchmark 10-year note fell to 4.5% as inflation concerns linked to Trump’s policies raised the prospect of the Fed cutting rates in 2025.
“Equities are unlikely to gain further until there is more clarity on what the incoming administration’s tax and tariff policies will look like,” said Rafi Boyadjian, chief market analyst at brokerage XM.
“How earnings expectations evolve in the coming months will also be critical for Wall Street, especially for tech and AI stocks.”
Traders expect the first rate cut of 2025 in March or May. Meanwhile, Trump’s victory has buoyed crypto stocks, with Bitcoin reaching $100,000.
MicroStrategy shares have jumped more than 300% this year as it continues to buy and hold bitcoin. The stock rose 1.9% on Tuesday, while Coinbase and MARA Holdings added 0.5% and 0.8%, respectively.
Other areas of the market, however, saw year-on-year declines, with material stocks down about 1.7%, hurt by economic woes in top metals consumer China.
Leading issues outperformed decliners by a 3.51-to-1 ratio on the NYSE and 1.88-to-1 on the Nasdaq.
The S&P 500 posted two new 52-week highs and no new lows, while the Nasdaq Composite posted 25 new highs and 15 new lows.
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