Traders observed a modest fluctuation in stock futures late Tuesday, coming after the S&P 500 secured a record close. Futures connected to the Dow Jones Industrial Average recorded a slight decline, losing 25 points or 0.05%, while the S&P 500 futures also dipped around 0.05%. The Nasdaq 100 futures remained relatively stable during the session.
On Tuesday, major U.S. indexes extended their rally, with technology stocks driving the upward momentum. Notable gains were seen in firms such as Alphabet, Nvidia, Broadcom, and Amazon. The S&P 500 concluded the regular trading hours with an increase of roughly 0.5%, ultimately achieving a new closing record at 6,909.79. It currently sits just shy of its intraday all-time high of 6,920.34. The Nasdaq Composite moved upward by about 0.6%, while the Dow ticked up nearly 0.2%, gaining around 79 points.
Earlier in the day, the Commerce Department released a better-than-expected third-quarter gross domestic product (GDP) reading of 4.3%, which exceeded the Dow Jones consensus estimate of 3.2%. This report, which had been delayed due to a government shutdown, prompted some traders to reassess their outlook on potential interest rate cuts for the early part of next year. Nevertheless, trading in fed funds futures continues to suggest the likelihood of two rate cuts by the end of 2026, as indicated by the CME FedWatch Tool.
Investor sentiment is buoyed by the anticipation of a “Santa Claus rally,” a seasonal increase that typically occurs during the last five trading days of the year and the first two of the new year, specifically from December 24 to January 5. LPL Financial’s chief technical strategist, Adam Turnquist, noted that the S&P 500 has historically generated an average return of 1.3% during this period, with a success rate of 78%. In contrast, the usual seven-day return averages just 0.3% with a positivity rate of 58%.
Turnquist pointed out that the current momentum leading toward the end of the year suggests a generally favorable scenario for a positive Santa Claus rally, which is often regarded as a bullish signal for January and the coming year. He acknowledged that, while the market breadth remains somewhat narrow for an index at such high levels, the overall trend appears positive, bolstered by a migration toward cyclical sectors. He indicated that a close above the S&P 500’s December high could signal the potential for the index to surpass the 7,000-point benchmark.
As traders look ahead to Wednesday morning, they will closely monitor weekly jobless claims reports. Additionally, the New York Stock Exchange will observe an early closure at 1 p.m. ET for Christmas Eve, with a complete shutdown scheduled for Christmas Day.
