Wall St ends higher as tech rally continues, led by Micron
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A trader working on the floor of the New York Stock Exchange, after the Dec 19 opening bell, in New York City.
PHOTO: EPA
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- US stocks closed higher on Dec 19, boosted by a tech rebound led by Micron and Nvidia, offsetting losses in consumer stocks like Nike.
- Optimism around AI shares returned after Micron's strong forecasts, with Nvidia rising amid potential US approval for China shipments.
- Investors bet on Federal Reserve rate cuts despite analysts warning of volatility due to "triple witching" and post-holiday price swings.
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NEW YORK - US stocks closed higher on Dec 19 after a rocky start to the week, as a rebound in technology shares offset tumbling consumer stocks such as Nike.
Megacaps extended gains from Dec 18, when chipmaker Micron Technology’s strong forecasts re-ignited optimism around AI-related shares, which had recently come under pressure over lofty valuations and funding concerns.
Micron shares reached a record high on Dec 19. Nvidia also rose as the US launched a review that could allow the first shipments to China of Nvidia’s second-most powerful AI chip.
Meanwhile, Oracle jumped after TikTok’s Chinese owner, ByteDance, signed binding agreements to hand control of the short-form video app’s US operations to a group of investors, including the cloud computing giant.
“Tech in general, particularly the AI-related companies, came under a fair amount of pressure and when Micron reported (on Dec 17) and the market reacted the way that it did, there’s the idea that maybe people can come back to these,” said Mr Thomas Martin, senior portfolio manager at Globalt Investments.
December has also traditionally been a strong period for stock markets. Since 1950, the so-called Santa Claus rally has been reflected by the S&P 500 rising by an average of 1.3 per cent over the last five trading days of the year and the first two trading days in January, according to the Stock Trader’s Almanac.
According to preliminary data, the S&P 500 gained 61.15 points, or 0.90 per cent, to end at 6,835.91 points, while the Nasdaq Composite gained 299.52 points, or 1.3 per cent, to 23,305.88.
The Dow Jones Industrial Average rose 180.38 points, or 0.38 per cent, to 48,132.23.
In consumer names, Nike shares slumped after the sportswear giant reported a drop in gross margins for the second consecutive quarter, hurt by poor sales in China and efforts to reset its product mix.
Lamb Weston plunged after the supplier of frozen French fries signalled muted demand for its products for the rest of the fiscal year.
Conagra fell after the Slim Jim meat snacks maker reported weak earnings.
Investors drew comfort from US consumer prices rising less than expected in November, but some analysts flagged that the print could be distorted due to the 43-day government shutdown that prevented the collection of October data.
Traders continued to bet on at least two 25-basis-point interest rate cuts next year from the Federal Reserve, according to LSEG data, while assigning a 20 per cent chance to the first reduction as early as January.
Analysts warned of higher volatility on Dec 19 due to “triple witching”, which is the quarterly, simultaneous expiration of stock options, stock index futures and stock index options contracts.
“The oversold bounce is helping and the options expiration is helping to kind of clear out some of those positions,” said Mr Brent Kochuba, founder of analytics service SpotGamma.
However, he noted that the options expiration could leave the market more vulnerable to price swings after the Christmas holiday. REUTERS
