Stock Markets Rise Ahead of Holiday with Positive Momentum
The S&P 500 Index ($SPX) (SPY) is up +0.74%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.47%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.93%. March E-mini S&P futures (ESH25) are up +0.63%, and March E-mini Nasdaq futures (NQH25) are up +0.85%. The NYSE and Nasdaq will close early today at 1 PM Eastern time for the Christmas Eve holiday.
Tech Stocks Drive Market Gains
Stocks are trading higher today, building on Monday’s gains primarily fueled by strength in chip and tech stocks. Continued strength in chip stocks followed the Biden administration’s announcement of a trade investigation into Chinese chips. This could lead to potential tariffs by the incoming Trump administration, providing protection for U.S. chip manufacturers.
China’s Economic Stimulus Plans Impact Global Markets
China may sell a record 3 trillion yuan ($411 billion) of special Treasury bonds in 2025 to stimulate its economy, as reported by Reuters. This is a significant increase from the 1 trillion yuan of bonds sold this year. Consequently, the possibility of enhanced economic stimulus in China has positively influenced global stock markets.
Interest Rates and Economic Indicators
However, stocks faced pressure from a +3.4 basis point rise in the 10-year T-note yield, adding to yesterday’s substantial gain of +6.4 basis points. The Philadelphia Fed’s December non-manufacturing activity index decreased by -0.1 points to -6.0, missing expectations for an increase to -2.4. In contrast, the Richmond Fed’s December manufacturing index rose by +4 points to -10 from November’s -14, aligning with market expectations. Currently, the markets estimate a 9% chance of a -25 basis point rate cut during the January 28-29 FOMC meeting.
Global Market Performance
Overseas stock markets are mixed today. The Euro Stoxx 50 gained +0.10%, breaking a three-session losing streak. China’s Shanghai Composite Index rose +1.26%, also ending a three-session decline. Japan’s Nikkei Stock 225 decreased by -0.32%, reversing part of Monday’s +1.19% rally.
Interest Rates Update
March 10-year T-notes (ZNH25) are down -4.5 ticks, reaching a new seven-month low. The 10-year T-note yield is up +3.4 basis points to 4.621%, marking a new seven-month high. This decline in T-note prices is partly due to the Treasury’s recent $69 billion auction of 2-year T-notes, with further sales of $70 billion of 5-year T-notes scheduled today and $44 billion of 7-year T-notes on Thursday. The German markets are closed today, but the 10-year German bund yield increased by +3.8 basis points to 2.323%. Likewise, the 10-year UK gilt yield rose +2.9 basis points to 4.575%.
Market Expectations for ECB Rate Cuts
Swaps are currently indicating a 100% probability of a -25 basis point rate cut by the ECB at its January 30 policy meeting, with an 8% chance for a -50 basis point cut.
Key U.S. Stock Movement
The Magnificent 7 stocks are performing well today, with Tesla (TSLA) leading the pack with over a +4% increase. Amazon (AMZN) and Meta Platforms (META) have both risen by more than +1%.
Chip stocks dominate in the Nasdaq 100 index, led by Arm Holdings (ARM) with a +3% gain. Other notable performers include Broadcom (AVGO), ON Semiconductor (ON), and Marvel Technology (MRVL), all up by more than +1%.
Cryptocurrency Influence
Crypto-related stocks are also seeing increases due to Bitcoin’s rally of more than +3% today. Microstrategy (MSTR) is up over +5%, leading in the Nasdaq 100. Riot Platforms (RIOT) also rose more than +5%, while Coinbase (COIN) is up more than +3%.
American Airlines Flight Disruptions
American Airlines (AAL) has fallen -0.3%, recovering most of a prior loss of more than -5% in pre-opening trade. The airline temporarily grounded its flights nationwide this morning due to a software glitch, lifting the ground halt around 7 AM Eastern time.
Starbucks Union Actions
Starbucks (SBUX) is up +1.9% even amid news that its workers’ union plans to expand a barista strike to over 300 cafes.
Earnings Reports
None.
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.
