Wall Street ends higher on gains by most megacaps

Wall Street's main indexes all ended higher on Monday, with both the Dow Jones Industrial Average and the Nasdaq Composite making it three straight wins, aided by gains by many of the so-called Magnificent Seven tech stocks on a holiday-thinned trading day.

With megacap stocks having outsized influence on markets, their performance during a week in which many investors take time off will be even more pronounced. Volumes on U.S. exchanges were 12.76 billion shares, down from the 14.89 billion shares average from the previous 20 trading days.

Meta Platforms, Nvidia and Tesla all closed between 2.3% and 3.7% higher, with Apple, Amazon.com, and Google parent Alphabet also in positive territory.

The gains helped propel the Nasdaq Composite and the Dow Jones Industrial Average to their third straight increases, and a second advance in three sessions for the S&P 500.

The S&P 500 gained 43.22 points, or 0.73%, to 5,974.07 points, and the Nasdaq Composite rose 192.29 points, or 0.98%, to 19,764.89. The Dow Jones Industrial Average climbed 66.69 points, or 0.16%, to 42,906.95.

After a solid run since the November presidential election, Wall Street's rally hit a bump this month, especially after the U.S. Federal Reserve forecast just two 25-basis-point rate reductions for 2025 - down from its September view of four cuts - and raised its annual inflation outlook.

This included a selloff last Wednesday triggered by the U.S. Federal Reserve signaling a slower rate-cut pace.

Chris Zaccarelli, chief investment officer at Northlight Asset Management, noted that while some course correction has occurred in recent days, as interest-rate expectations have been modified by investors, many of the same trends remain in place, including tech and tech-enabled stocks finding favor.

"We're really seeing a microcosm today of what we've seen all year long, and the trends are back in place despite what we've seen in the last couple of weeks where things bounced around a little bit," Zaccarelli said.

As well as major benchmark gains, eight of the 11 S&P sectors finished higher on Monday, led by communication services , which climbed 1.4%.

Markets are also entering a historically strong period for U.S. stocks. Since 1969, the last five trading days of the year, combined with the first two of the following year, have yielded an average S&P 500 gain of 1.3% - a period known as the "Santa Claus Rally", according to the Stock Trader's Almanac.

Northlight's Zaccarelli said he believed conditions were right for such a rally, as this year's gains would likely mean investors would hold on to positions as opposed to selling and booking losses which they can use for tax purposes.

Qualcomm's shares rose 3.5% after a jury found its central processors are properly licensed under an agreement with UK-based Arm Holdings. Shares of Arm, which has vowed to seek a fresh trial, fell 4%.

Walmart dropped 2% after the U.S. consumer finance watchdog accused the retail giant and workforce payments company Branch Messenger of forcing more than a million delivery drivers into using accounts that cost them more than $10 million in junk fees.

Eli Lilly gained 3.7% after the U.S. Food and Drug Administration approved the drugmaker's weight-loss treatment, Zepbound, for obstructive sleep apnea. Shares of sleep apnea device makers ResMed and Inspire Medical fell 2.6% and 0.1% respectively.

Nordstrom's shares declined 1.5% after the department store chain's founding family and Mexican retailer El Puerto de Liverpool agreed to take the company private.