New York stocks rose ahead of the Christmas holiday. As growth data beat expectations and bolstered confidence in economic fundamentals, artificial intelligence (AI) shares led the rally and lifted indexes across the board.
On the 23rd (local time) at the New York Stock Exchange (NYSE), the large-cap-focused S&P 500 closed up 0.4% at 6,906.22 from the prior session. It was the first time the index finished above the 6,900 level. The tech-heavy Nasdaq also joined the record high march, ending up 0.5% at 20,974.17 (reflecting estimates). However, the blue-chip Dow Jones industrial average edged lower, showing a mixed picture.
Stock investors focused on the revised U.S. third-quarter gross domestic product (GDP) released that day. According to the Commerce Department, third-quarter economic growth came in at an annualized 4.3%, far above the market forecast of 3.2%. It was the fastest pace in the past two years. Delayed by the government shutdown, the report showed the U.S. economy is still maintaining solid growth.
But it worked the other way for investors waiting for rate cuts. Because the economy is so strong, the Federal Reserve (Fed) has little reason to rush to cut rates. In fact, markets see a low chance of cuts early next year. Federal funds futures are pricing in only two cuts by the end of next year.
Brett Kenwell, an eToro analyst, said, "The U.S. economy continues to soar, but the real-economy sentiment differs, with consumer confidence felt by ordinary citizens declining," and noted, "Whether consumers maintain resilience through the year-end shopping season will determine the direction of GDP."
Comments by President Donald Trump also added to market uncertainty. Trump wrote on social media that "rates should be lowered when the market is doing well," openly pressuring that the next Fed chair should agree with his monetary policy stance. The remarks rekindled debate over the Fed's independence as Chair Jerome Powell's term nears its end.
By stock, the rally was concentrated in a few large caps, showing a clear "polarization." The market-cap-weighted S&P 500 hit a record high, but the equal-weighted S&P 500 fell instead. The small- and mid-cap-focused Russell 2000 also slipped 0.6%. Nvidia shares rose more than 2%, boosting overall market sentiment.
Morgan Stanley Wealth Management strategist Danielle Skelly said, "There will be several more hurdles ahead, but I see two pillars—AI investment and high-income consumer expenditure—driving the U.S. economy through 2026," adding, "The market will ultimately trace an upward-sloping curve following corporations' earnings growth."
Prices of safe-haven gold and silver also hit all-time highs that day. Gold futures surged to $4,530.80 per ounce, while silver topped the $70-per-ounce mark for the first time. West Texas Intermediate (WTI) crude traded around $57.84 per barrel, and Bitcoin retreated to about $87,700.
The New York stock market will close early at 1 p.m. on Dec. 24, Christmas Eve. It will be closed on Dec. 25, Christmas Day.