U.S. stock markets closed higher on Wednesday for the fifth consecutive day supported by the strong momentum of artificial intelligence (AI) trade. Economic data released yesterday were mixed. All three major stock indexes ended in positive territory. Markets traded for a half day on Wednesday on account of Christmas eve and on Thursday Wall Street was closed to celebrate Christmas Day.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.6% or 288.75 points to close at 48,731.16, marking a new closing high for the blue-chip index. Notably, 27 components of the 30-stock index ended in positive territory, two finished in negative territory and one remained unchanged.
The tech-heavy Nasdaq Composite finished at 23,613.31, rising 0.2% on the strong performance of AI bigwigs. The major gainer of the tech-laden index was Micron Technology Inc. MU. The stock price of the AI semiconductor giant was up 3.8%. Micron Technology currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The S&P 500 gained 0.3% to finish at 6,932.05, marking a new all-time closing high. During intraday trading, the benchmark touched a new all-time high at 6,937.32. Six out of 11 broad-sectors of the broad-market index ended in positive territory while five ended in negative territory. The Energy Select Sector SPDR (XLE) and the Communication Services Select Sector SPDR (XLC) rose 0.7% and 0.6%, respectively. However, the Consumer Staples Select Sector SPDR (XLP) slipped 0.5%.
The fear gauge, the CBOE Volatility Index (VIX) was down 3.8% to 13.47. A total of 7.61 billion shares were traded on Wednesday, lower than the last 20-session average of 16.21 billion. Advancers outnumbered decliners on the NYSE by a 2.37-to-1 ratio. On the Nasdaq, a 1.63-to-1 ratio favored advancing issues.
AI Trade Continues to Thrive
The AI saga, supported by the massive growth of cloud computing and data centers, is yet to fully unfold. This space remains rock solid supported by an extremely bullish demand scenario. The demand for data center capacity surged to manage and store the vast amount of cloud computing-based data.
Goldman Sachs and Bank of America projected that AI infrastructure capex spending will cross $1 trillion in 2028. JP Moran and Citigroup forecast this figure to total $5 trillion cumulative in 2030. Research firm McKinsey & Co. estimated that global AI-powered data center infrastructure capex will reach around $7 trillion by 2030.
More Rate Cut Hope
The Fed lowered the benchmark lending rate by 75 basis points in 2025 after lowering it by 1% in 2024. The current Fed fund rate is in the range of 3.50-3.75%. Market participants are hopeful for two more rate cuts of 25 basis points each in 2026. The CME FedWatch interest rate derivative tool currently shows the first rate cut to happen in April with a probability of 59.3%.
Economic Data
For the week ended Dec.19, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.4 million barrels from the previous week.
The Department of Labor reported that initial claims decreased 10,000 to 214,000 for the week ended Dec. 24, lower than the consensus estimate of 221,000. The previous week’s data was 224,000. Continuing claims (those who have already received government aid and reported a week behind) increased 38,000 to 1.923 million for the week ended Dec.13. The previous week’s data was revised downward by 12,000 to 1.885 million from 1.897 million reported earlier.
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Micron Technology, Inc. (MU): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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