The U.S. stock market opened with a muted response as last week’s trading session was shortened by the Christmas holiday break. Investors expect the markets to close the year on a high note, with equities hitting record highs and nearing bullish milestones.
After observing an early close and full closure on Christmas Eve (December 24) and Christmas Day (December 25), respectively, the markets returned to normal trading hours, from 9:30 AM to 4:00 PM ET. Despite futures showing a slight pullback in early trading, major indexes are posting cautious movements, building on a robust performance seen earlier last week while sustaining the trend.
U.S. Futures Indexes Sustain Last Week’s Momentum as Investors Expect Markets to Close 2025 on a Record High
The S&P 500 Futures remained largely unchanged on Friday, edging up 0.1% to 6,977 points, maintaining a modest gain for the week. The Dow Jones Futures also remained muted at 49,018 points. Meanwhile, the Nasdaq 100 Futures dipped 0.1% to 25,846.75 points by midday. Trading volumes are expected to remain thin this week, with many market participants away from their desks due to the New Year holidays, limiting directional moves.
Wall Street ended last week strongly, with the S&P 500 (SPX) hitting a new all-time high to close at 6,932.05. It briefly touched a fresh intraday record of 6,937.32 points, with the gains driven by a rebound in technology stocks. This positive momentum leading into the new year has fueled speculation about the continuation of the “Santa Claus rally,” a historical trend often observed in the last five trading days of December and the first two days of January. The benchmark index is on track to record its eighth consecutive monthly gains, which would be its longest monthly winning streak since 2017-2018.
Major U.S. indexes are on course to end December on a high after stocks shook off turbulence suffered earlier in the month due to a weakness in tech shares, as investors raised concerns about spending levels across the artificial intelligence sector.
Investors Count on Positive U.S. Economic Numbers to Trigger Fed Interest Rate Cuts Next Year
The change in sentiment has also been supported by expectations that the Federal Reserve is nearing the end of its quantitative tightening cycle, with markets already pricing in interest rate cuts by the U.S. central bank next year. Traders will also be closely watching several key economic releases this week, including the Case-Shiller Home Price Index for October, the Pending Home Sales for November, and the official minutes from the December Federal Open Market Committee (FOMC) meeting, which are scheduled for release tomorrow. Furthermore, the Non-Farm Payrolls report for December is slated for release in January. These economic indicators are critical for future monetary policy and market sentiment.
The FOMC minutes will provide more insight into the Fed’s discussions surrounding potential rate cuts. The central bank has lowered its benchmark interest rate by 75 basis points over its last three meetings of 2025 to the current level of 3.50% to 3.75%. However, the Fed’s most recent vote at the December 9-10 meeting to lower rates by 25 bps was divided. Experts suggest that the minutes for that meeting, due to be released on Tuesday, may give more context on what some of the arguments were about.
Michael Reynolds, vice president of investment strategy at Glenmede, said that the markets are heavily focused on analyzing rate cut expectations happening next year.
Investors are also waiting on U.S. President Donald Trump to name his nominee for the Chairman of the Federal Reserve, who will replace outgoing chair Jerome Powell, whose term ends in May.
With only a handful of trading sessions left in 2025, the S&P 500 is up nearly 18% for the year, while the tech-focused Nasdaq Composite is up 22%. However, the tech sector, which has been the key driver of the three-year bull market, has struggled in recent weeks, while other areas of the market have performed better. Despite last week’s rebound, the S&P 500 tech sector (SPLRCT) declined more than 3% since the beginning of November. During that time, areas such as financials (SPSY), transport (DJT), healthcare (SPXHC), and small-cap companies (RUT) posted solid gains.
These market moves indicate that investors are rotating capital into areas where valuations are more moderate. Anthony Saglimbene, chief market strategist at Ameriprise Financial, noted that traders are buying into the narrative that the U.S. economy is on a “pretty solid footing” at the moment, with the sentiment weathering potential roadblocks this year, which may not necessarily be bottlenecks in 2026.
Read More: U.S. stock futures little Changed Following the S&P 500’s Record Close
Individual Stocks Set the Tone for New Year’s Week Trading in the U.S.
Several major public companies are expected to make waves this week, influencing individual stock movements. Shares of Nvidia (NVDA) saw a slight dip of 0.3% during early trading on Friday. This came despite news that the chipmaker and semiconductor giant’s plans to acquire high-performance AI accelerator chip company Groq, in a $20 billion all-cash deal. This strategic acquisition underscores the Jansen Huang-founded firm’s aggressive push to solidify its dominance in the rapidly expanding AI market. NVDA has since rebounded to close 1.1% higher at $190.53.
Snowflake (SNOW) is in advanced talks to acquire AI-native observability startup Observe for around $1 billion, marking the company’s strategic expansion into application monitoring. At the same time, Denso Corporation (DNZOY) and MediaTek Inc. (2454.TW) have signed a joint development agreement to accelerate the production of next-generation automotive system-on-chips (SoCs), suggesting continued innovation in the smart vehicle technology market.
Meanwhile, sports brand Nike (NKE) saw its shares surge 4.6% before the session closed on Wednesday after board member and Apple CEO Tim Cook disclosed a $3 million purchase of its stock. This positive sentiment carried forward to pre-market trading on Friday, with NKE up 0.5% to close at $60.93.
