Markets Surge on Tech Strength Amid Economic Stimulus News
The S&P 500 Index ($SPX) (SPY) closed up 1.10% on Tuesday, while the Dow Jones Industrial Average ($DOWI) (DIA) saw an increase of 0.91%. The Nasdaq 100 Index ($IUXX) (QQQ) rose by 1.37%. Additionally, March E-mini S&P futures (ESH25) climbed 1.04%, and March E-mini Nasdaq futures (NQH25) increased 1.35%. Trading ended early on Tuesday at 1 PM Eastern Time due to the Christmas Eve holiday.
Chip and Tech Stocks Drive Market Rally
Stocks rallied on Tuesday, buoyed by strong performances in the chip and tech sectors. Following the announcement of a trade investigation into Chinese chip imports by the Biden administration, U.S. chip makers could benefit from potential tariffs, a possibility that sparked market optimism.
China’s Bold Bond Plans and its Global Impact
According to a Tuesday report by Reuters, China might issue a record 3 trillion yuan ($411 billion) in special Treasury bonds in 2025 to stimulate its economy, a significant increase from the 1 trillion yuan sold this year. This anticipated economic move supports positive sentiment across global stock markets.
Mixed Signals from Economic Indicators
Despite the bullish trends, a slight rise of 0.2 basis points in the 10-year T-note yield, which gained 6.4 basis points on Monday, raised some concerns. Additionally, the Philadelphia Fed’s non-manufacturing activity index dropped to -6.0 in December from -5.9 in November, contrary to expectations of an increase. On a more positive note, the Richmond Fed’s manufacturing index improved by 4 points to -10, aligning with market forecasts.
International Markets Show Variability
Tuesday’s overseas trading was mixed. The Euro Stoxx 50 climbed 0.10%, breaking a three-day losing streak. Similarly, China’s Shanghai Composite Index rose by 1.26%. Conversely, Japan’s Nikkei Stock 225 fell by 0.32%, losing part of Monday’s gains.
Interest Rate Developments
March 10-year T-notes (ZNH25) reached a new seven-month low before recovering slightly, finishing up 1.5 ticks. The yield on the 10-year T-note rose to 4.589%. This uptick follows Congress’s recent actions to avoid a government shutdown, which would have adversely affected the economy. Additionally, the Treasury’s sale of $70 billion in 5-year T-notes added to supply pressure. T-note prices found some support due to the weak report from the Philadelphia Fed.
US Stock Movers: Tech Leads the Charge
In the U.S. stock market, the Magnificent 7 stocks performed strongly, with Tesla (TSLA) leading the way with over a 7% gain. Amazon (AMZN), Meta Platforms (META), and Apple (AAPL) also increased by over 1%.
Chip stocks once again dominated the Nasdaq 100 index. Notable gainers included Arm Holdings (ARM) and Broadcom (AVGO), both rising over 3%. Other chipmakers such as Marvel Technology (MRVL), ON Semiconductor (ON), and Texas Instruments (TXN) all gained more than 1%.
In the cryptocurrency arena, stocks surged after bitcoin (^BTCUSD) jumped more than 5%. Notably, Microstrategy (MSTR) rose more than 7%, topping the Nasdaq 100 leaderboard, followed by Riot Platforms (RIOT) at +8% and Coinbase (COIN) at over +4%.
American Airlines (AAL) recovered from an initial drop due to a nationwide grounding of flights caused by a software issue, closing up 0.57%. The ground halt lasted approximately one hour before operations resumed around 7 AM Eastern time.
Starbucks (SBUX) saw a 2.81% increase, despite its workers’ union announcing a planned strike at over 300 cafes.
Earnings Reports Coming Up
Alumis Inc (ALMS) is scheduled to report its earnings on December 26, 2024.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
