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The Nasdaq ended 1.2% higher on Monday, taking the two-day advance to 600 points, while the S&P 500 added 0.5%. The Dow Jones closed just below the flat line.
Nvidia’s shares ended 3.5% higher and at a record high, marking its third straight day of gains. Peer companies like Broadcom and Micron also saw gains of up to 10%. The VanEck Semiconductor ETF surged over 3%.
A report from the Washington Post on Monday also boosted market sentiment. The report stated that President-elect Donald Trump’s tariff plan will be narrower than anticipated and cover only critical imports. Trump had called for universal tariffs between 10% to 20% during his campaign. In response, shares of Ford and General Motors gained between 1% to 3%. However, Trump and his aides denied the report.
Banks climbed on deregulation optimism, with Michael Barr stepping down as the Federal Reserve’s vice chair for supervision. The news also fuelled a steepening of the Treasury curve, with longer maturities underperforming. The yield on 30-year bonds hit the highest since late 2023.
Scott Rubner at Goldman Sachs Group Inc. sees signs of a short-term tactical bullish setup for US stocks, driven by institutional money flows and a lack of selling across trend-following systematic funds. At JPMorgan Chase & Co., Andrew Tyler said while risks to the fierce rally are mounting, a bearish downturn remains “extremely unlikely” amid strong economic growth.
“The recovery we’ve seen Friday and today shows just how strong the ‘buy the dip’ mentality still is,” said Mark Hackett at Nationwide. “Investors continue to lean heavily on tech. Looking ahead, 2025 won’t be a year for easy double-digit gains by solely investing in the S&P 500. Success in this market will require more discipline and creativity.”
The yield on 10-year Treasuries rose two basis points to 4.62%. The Bloomberg Dollar Spot Index fell 0.6%. The Loonie gained as Prime Minister Justin Trudeau quit after more than nine years leading Canada. Bitcoin topped $100,000. Oil halted a five-session rally.
The S&P 500’s December pullback didn’t prevent clients from being net buyers in nine of 11 sectors last month, according to Chris Larkin at E*Trade from Morgan Stanley.
“While there may have been a defensive element to some of the buying in utilities and real estate, the push into the consumer discretionary sector suggested more of a ‘risk-on’ mindset — led by purchases of TSLA and AMZN,” he noted.
Traders are also gearing up for Friday’s jobs report, which is expected to show employers tempered hiring to wrap up a year of moderating yet still-healthy labor market. The data is unlikely to alter the view of Federal Reserve officials that they can slow the pace of rate cuts amid a durable economy and inflation that’s dissipating only gradually.
Fed Governor Lisa Cook said Monday that policymakers can proceed more cautiously amid a sturdy labor market and lingering inflation pressures.
Notwithstanding fewer likely rate cuts, Solita Marcelli at UBS Global Wealth Management, sees a favorable backdrop ahead — driven by a mixture of lower borrowing costs, resilient US activity, a broadening of US earnings growth, further AI monetization, and the potential for greater capital market activity under a second Trump administration.
“We expect the S&P 500 to hit 6,600 by end-2025 and suggest that under-allocated investors consider using any near-term turbulence to add to US stocks, including through structured strategies,” she noted.
(With Inputs From Agencies.)
