On a cheerful Wednesday leading up to Christmas, U.S. stock markets celebrated their fifth consecutive day of gains, buoyed by the notable momentum in artificial intelligence (AI) trading. Despite mixed economic data released the day prior, all three major stock indexes closed positively, setting an optimistic prelude to the holiday. It’s important to note that trading hours were shortened on Wednesday due to Christmas Eve, and Wall Street would be closed on Thursday for Christmas Day.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) demonstrated robust performance, increasing by 0.6%, equating to an impressive 288.75 points, closing at 48,731.16. This result marks a new closing high for the blue-chip index, with 27 out of 30 components recording gains. Only two stocks ended in the red, and one remained unchanged.
Meanwhile, the tech-centric Nasdaq Composite finished at 23,613.31, reflecting a 0.2% rise, underpinned by strong performances from key players in the AI sector. Micron Technology Inc. (MU) notably led tech gains with a notable increase of 3.8%, backed by robust demand dynamics. Currently, Micron Technology holds a Zacks Rank #1 (Strong Buy), indicating strong market confidence. For investors looking for promising opportunities, the complete list of today’s Zacks #1 Rank stocks is available here.
The S&P 500 also marked its territory, gaining 0.3% to end the day at 6,932.05, setting a new all-time closing high. During intraday trading, the index even peaked at 6,937.32. Out of 11 broad sectors, six finished positively while five struggled. Notably, the Energy Select Sector SPDR (XLE) and the Communication Services Select Sector SPDR (XLC) rose by 0.7% and 0.6%, respectively, although the Consumer Staples Select Sector SPDR (XLP) fell by 0.5%.
The fear gauge, known as the CBOE Volatility Index (VIX), dipped by 3.8% to settle at 13.47. Total shares traded totaled 7.61 billion—below the 20-session average of 16.21 billion. The NYSE saw advancing issues outnumber decliners by a solid 2.37-to-1 margin, while the Nasdaq reflected a more moderate 1.63-to-1 ratio in favor of advancing stocks.
AI Trade Continues to Thrive
The ongoing evolution of AI is part of a larger narrative, amplified by vigorous growth in cloud computing and data center demands. This sector is experiencing an undeniable boom due to the increasing necessity for data management and storage as more organizations transition to cloud solutions.
Investment banks like Goldman Sachs and Bank of America predict that by 2028, capital expenditures for AI infrastructure will exceed $1 trillion. Similarly, JP Morgan and Citigroup anticipate a cumulative total reaching $5 trillion by the year 2030. On a broader scale, research firm McKinsey & Co. projects global capital expenditures on AI-powered data centers could soar to around $7 trillion by 2030.
More Rate Cut Hope
The Federal Reserve has recently made significant moves to ease monetary policy, lowering the benchmark lending rate by 75 basis points in 2025, following a 1% decrease in 2024. Presently, the Fed fund rate sits between 3.50% and 3.75%. Market participants are now hopeful for two additional rate cuts, each of 25 basis points, anticipated for 2026. The CME FedWatch Tool suggests a 59.3% probability that the first of these cuts might materialize in April.
Economic Data
As for economic indicators, the week ending December 19th saw U.S. commercial crude oil inventories increase by 2.4 million barrels, excluding those in the Strategic Petroleum Reserve.
According to the Department of Labor, initial jobless claims decreased by 10,000, settling at 214,000 for the week ending December 24, which was notably lower than the anticipated 221,000. The previous week’s figures were revised to 224,000. Continuing claims, which track individuals still receiving government assistance, rose by 38,000 to reach 1.923 million for the week ending December 13. This previous week’s data was also adjusted downward by 12,000, from 1.897 million to 1.885 million.
Zacks Naming Top 10 Stocks for 2026
For eager investors looking ahead, Zacks has been delving into the market to identify 10 top picks for 2026. Historical data indicates that these selections have shown remarkable potential, with the Zacks Top 10 Stocks gaining a staggering +2,530.8% from 2012 through November 2025, which vastly outperformed the S&P 500’s +570.3% during the same stretch.
As Zacks’ Director of Research, Sheraz Mian, combs through 4,400 companies for the best opportunities for the coming year, the anticipation builds. These curated stock picks will be released on January 5, an event not to be overlooked by any serious investor.
Be First to New Top 10 Stocks >>
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
