US stocks rise in quiet Christmas Eve trading session

Wall Street's main indexes rose on Tuesday in a truncated trading session before Christmas, with the S&P 500 and the Nasdaq up for the third consecutive day, helped by gains in a handful of megacap and growth stocks.

Broadcom and Nvidia provided the biggest boost to the indexes, advancing 2.7% and 0.7%, respectively, while Consumer Discretionary and Technology led gains among S&P 500 sectors.

With few major catalysts, thin trading volumes expected in the final days of the year raised the prospect of choppy trading.

Stock markets will shut at 1:00 p.m. ET on Tuesday and will be closed for Christmas on Wednesday.

At 09:42 a.m. the Dow Jones Industrial Average rose 32.38 points, or 0.08%, to 42,939.33, the S&P 500 gained 21.68 points, or 0.36%, to 5,995.75, and the Nasdaq Composite gained 116.55 points, or 0.59%, to 19,881.43.

"Investors are breathing a sigh of relief that maybe the hawkish rate cut last week combined with the softer PCE reading indicate that inflation is not that big of a re-emerging threat," said Sam Stovall, chief investment strategist of CFRA Research.

"As a result, maybe this market will end up creeping higher between now and the end of the year."

After a stellar run to record highs following the November election, which sparked hopes of pro-business policies under U.S. President-elect Donald Trump, Wall Street's rally hit a bump this month as investors grappled with the prospect of higher interest rates in 2025.

The U.S. Federal Reserve eased borrowing costs for the third time this year last Wednesday, but signaled only two more 25-basis-point reductions next year, down from its September projection of four cuts, as policymakers weigh the possibility of Trump's policies stoking inflation.

Traders expect the Fed to leave rates in the range of 4% to 4.25% by the end of 2025, from between 3.75% and 4% about 10 days ago, according to CME's FedWatch tool.

Markets are currently in a historically strong period called the "Santa Claus rally". The S&P 500 on average has gained 1.3% in the last five days of December and first two days of January, according to data from the Stock Trader's Almanac going back to 1969.

However, market participants are questioning if U.S. stocks' climb to new record highs will be attainable in the coming days, amid concerns about sky-high valuations and the market's overall health.

The benchmark S&P 500 fell about 1% in December but the equal-weight S&P 500, a proxy for the average index stock, is down 5.8%.

NeueHealth soared 64% after the healthcare provider said New Enterprise Associates, its largest shareholder, and a group of existing investors will take the company private in a $1.3 billion deal.

American Airlines' shares were down 1.9% after the carrier briefly grounded all its flights in the United States due to an unspecified technical issue.

Declining issues outnumbered advancers by a 1.21-to-1 ratio on the NYSE, and by a 1.07-to-1 ratio on the Nasdaq.

The S&P 500 posted two new 52-week highs and no new lows, while the Nasdaq Composite recorded 17 new highs and 31 new lows.