Stock Market Today: Wall Street Rises at the Start of a Holiday-Shortened Week

Stocks rebounded after a rough start to the day, and Wall Street began a holiday-shortened week on a positive note. Despite some fluctuations at the start, major indexes finished the trading day higher.

The S&P 500 index closed 0.7% higher, following a dip of 0.5% early in the day. Similarly, the Dow Jones Industrial Average bounced back from an early fall to gain 0.2% by the end of trading. The tech-focused Nasdaq composite surged 1% as well.

Much of the increase was driven by strong performances in technology and communications stocks, which overshadowed losses seen in consumer goods companies and other sectors. Notably, semiconductor leader Nvidia saw its shares rise by 3.7%, and Broadcom jumped 5.5%, providing solid support for the overall market.

In contrast, some retail giants faced declines, with Walmart dropping by 2% and PepsiCo decreasing by 1%.

In other news, Japanese car manufacturers Honda and Nissan have reportedly engaged in talks regarding a potential merger, which could include Mitsubishi Motors. Following this announcement, U.S.-listed shares in Honda surged by 12.7%, while Nissan's shares remained unchanged.

Drugmaker Eli Lilly experienced a rise of 3.7% after obtaining regulatory approval for Zepbound, touted as the first medication prescribed for adults dealing with sleep apnea.

On a less positive note, department store chain Nordstrom saw its shares fall by 1.5% after entering into an agreement to go private in a deal valued at $6.25 billion involving members of the Nordstrom family and a Mexican retail group.

Overall, the S&P 500 gained 43.22 points, closing at 5,974.07. The Dow increased by 66.69 points to finish at 42,906.95, and the Nasdaq rose by 192.29 points, closing at 19,764.89.

This week, traders received updated information on U.S. consumer confidence. According to the Conference Board, consumer confidence dipped in December, with the index declining to 104.7 from 112.8 in November. This figure was below Wall Street’s expectation of 113.8.

The unexpected decline in consumer confidence follows several upbeat economic reports from last week. One report indicated that the overall economy expanded at an annualized rate of 3.1% over the summer, surpassing previous estimates. Additionally, data on unemployment benefit applications suggested a robust labor market.

A report released on Friday showed that a key inflation metric favored by the Federal Reserve was marginally lower than economists had predicted last month. Rising inflation fears have created uncertainty for Wall Street and the Federal Reserve.

Recently, the central bank delivered its third interest rate cut this year; however, inflation has remained persistently above the Fed's 2% target. They have hinted that there may be fewer interest rate cuts in the next year than initially expected due to inflation worries.

Investor optimism regarding further interest rate reductions has contributed to a roughly 25% increase in the S&P 500 for 2024, including 57 record highs this year.

Nevertheless, inflation concerns are fueling uncertainties for 2025, which also involve the labor market's future and potential changes in economic policies under a new administration.

As noted by Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company, a significant portion of the market's strong performance prior to last week was predicated on optimistic scenarios for 2025.

In the bond market, treasury yields experienced an uptick, with the yield on the 10-year Treasury increasing to 4.59% from 4.53% at the end of the previous week.

European markets generally ended in the red, while Asian markets posted gains.

This week, various economic reports are scheduled for release in the U.S. On Tuesday, there will be an update on newly constructed home sales for November, and a report regarding unemployment benefit claims is expected on Thursday.

On Tuesday, U.S. markets are set to close early at 1 p.m. Eastern time in observance of Christmas Eve, and will remain closed all day on Wednesday in honor of Christmas.

Stocks, Market, Technology, Confidence, Economy