U.S. stocks closed higher on Wednesday with each of the major indexes posting their fifth consecutive session of gains, while the Dow Jones Industrial Average and S&P 500 posted all-time closing highs in a broad rally during a holiday-shortened session.
The indices have risen in recent days, driven in part by the rally in AI-related companies following last week’s sell-off sparked by concerns that inflated valuations and high capital expenditures would dent profits.
But the latest data shows that the economy remains resilient, and the market continues to price in about 50 basis points of Fed rate cuts next year, although expectations of a reduction in January are low, according to CME’s FedWatch tool.
It was also learned on Wednesday that jobless claims unexpectedly fell last week.
Trading volumes were low. US markets will be closed on Thursday for Christmas.
“The Fed is unlikely to lower rates again, at least for a while. Who knows what will happen when May comes and we have a new Fed chief? But we have a very low probability of a cut in January,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
According to preliminary data, the S&P 500 gained 22.33 points, or 0.32%, to 6,932.12 units; The Nasdaq Composite rose 51.46 points, or 0.22%, to 23,613.31 units; and the Dow Jones Industrial Average added 289.40 points, or 0.60%, to 48,731.81 units.
Shares of Micron Technology rose, extending their rally after the company released strong guidance last week. Bank stocks also contributed to gains, with the financial sector being one of the most profitable of the 11 S&P 500 sectors.
Recent gains in U.S. stocks have raised hopes of a “Santa Claus rally,” a seasonal phenomenon in which the S&P 500 posts gains in the last five trading days of the year and the first two of January, according to Stock Trader’s Almanac. That period began on Wednesday and would last until January 5.
U.S. equities have seen wild swings this year as headlines related to tariffs, concerns about high valuations of technology and artificial intelligence companies, and rapidly changing interest rate expectations have fueled volatility.
With information from Reuters.
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