By David French
(Reuters) -Wall Street’s main indexes all closed higher on Tuesday, with gains in megacap and growth stocks bolstering benchmarks in a truncated Christmas Eve session.
Both the Dow Jones Industrial Average and Nasdaq Composite scored four straight sessions of gains, with the S&P 500 taking its winning streak to three sessions, marking the first day of the seasonal Santa Claus rally.
The Dow had skidded for 10 straight sessions earlier this month, its longest losing streak since 1974.
With megacap stocks having outsized influence on markets, their performance is often a key driver of indexes. When coupled with reduced trading volumes and few other catalysts, as many investors take time off for the holidays, this is even more pronounced.
All the so-called Magnificent Seven megacap technology stocks climbed on Tuesday, led by the 7.4% jump in Tesla shares.
The automaker’s best one-day gain in six weeks helped push the consumer discretionary index 2.6% higher. It was the top gaining sector in the S&P, with all 11 ending in positive territory.
Elsewhere, chip manufacturers were also buoyant. Broadcom and Nvidia rose 3.2% and 0.4%, respectively, while Arm Holdings climbed 3.9%, recouping most of the losses suffered the previous day from losing a court case.
Growth names rose despite U.S. Treasury interest rates remaining elevated – the benchmark 10-year note yielded around 4.61% on Tuesday, its highest level since May. Traditionally, higher debt costs crimp growth stocks.
However, the long-term themes around technology development, including advancements in artificial intelligence, overshadow any near-term moves in Treasuries, said Charlie Ripley, senior investment strategist for Allianz Investment Management.
“This reinforces that view that the sector is going to remain strong, and should be well into the new year,” he said.
The S&P 500 climbed 65.97 points, or 1.10%, to 6,040.04 points, while the Nasdaq Composite advanced 266.24 points, or 1.35%, to 20,031.13. The Dow Jones Industrial Average rose 390.08 points, or 0.91%, to 43,297.03.
Stock markets shut at 1:00 p.m. ET on Tuesday and will be closed for Christmas on Wednesday.
After a stellar run to record highs following the November U.S. election, which sparked hopes of pro-business policies under President-elect Donald Trump, Wall Street’s rally hit a bump this month as investors grappled with the prospect of higher interest rates in 2025.
The Federal Reserve eased borrowing costs for the third time this year last Wednesday, but signaled only two more 25-basis-point reductions next year, down from its September projection of four cuts, as policymakers weigh the possibility of Trump’s policies stoking inflation.
