Stocks Cautiously Climbing as Nasdaq Gains 0.4%
Stocks are up slightly this week but December is till looking bearish rather than experiencing its regular bullish trend.
Quick overview
- The stock market showed slight recovery on Tuesday morning, with the Nasdaq up 0.4% and the S&P 500 up 0.2%.
- Monday ended a five-day winning streak for major indices, marking an unusual start to December, which is typically bullish.
- Concerns over the AI industry's future have negatively impacted tech stocks, despite significant growth from companies like Nvidia and AMD.
- While some recovery is anticipated, the potential for a Santa Claus rally this year remains uncertain due to erratic market behavior.
After a day of declining values on Monday, the stock market ticked up slightly on Tuesday morning in early trading, with the Nasdaq adding 0.4% to its total.
Tech stocks could see a small upswing today thanks to some minor recovery by the market. The Nasdaq Composite is up slightly for Tuesday, and the Dow is just about flat. The S&P 500, however, is up 0.2%, and these numbers indicate an upturn that could provide the market with some bullish momentum.
Monday marked the end of 5-day winning streaks for all three indices, which was an unusually negative start for the months. Typically, December is bullish for stocks, but like September of this year, this month is bucking the trend.
Will We See a Santa Claus Rally This Year?
Most years, the stock market moves higher after Thanksgiving in what is known as a Santa Clause rally. This expected market boom is caused by year-end investments, shopping sprees, and abnormally high credit card purchases. There may not be a rally of that sort this year, though. The market has behaved erratically and not as expected, with September proving to be unusually bullish.
It is possible that December and September will simply switch places this year, and December will end up being a bearish month. This year is anything but a normal market cycle thanks to the Trump administration issuing tariffs and then withdrawing them or decreasing them over and over again.
The market has been hindered by worries over the end of the AI industry, or at the very least, fears that it will shrink drastically in the coming months and years. These concerns have held back tech stocks in particular, bringing down the S&P 500 and Nasdaq indices for weeks.
However, AI has changed the stock market dramatically, and now many of the leading stocks are from companies that have embraced AI and have used it to grow their businesses. Even if the AI market bubble bursts, companies like Nvidia (NVDA) and Advanced Micro Devices (AMD) will be able to hold onto significant market shares. This is why these two companies in particular have seen tremendous growth this year and should continue to impress through the end of 2025.
The overall stock market looks like it will regain some lost ground for Tuesday, but whether that leads to an extended rally or not remains to be seen. We anticipate some recovery at least, but a rally may be expecting too much from a troubled market that is hard to pin down and that is shifting in real time.
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