Stocks delivered for investors last week as positive economic data and bullish holiday cheer powered the start of a “Santa Claus rally” past consumer bah humbug sentiment.
The Standard & Poor’s 500 Index rose 1.40 percent, while the Nasdaq Composite Index advanced 1.22 percent. Meanwhile, the Dow Jones Industrial Average gained 1.20 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, moved ahead 1.16 percent.1,2
AI Stock Sleigh Delivers
Stocks rallied at the start of the week, riding pre-holiday momentum as artificial intelligence (AI) related technology names continued to drive gains.3
Fresh data out Tuesday initially quashed market momentum, reflecting investor concern that the stronger-than-expected Q3 economic growth might dissuade the Fed from adjusting interest rates in 2026.
But those fears appeared to subside after a Fed official said the U.S. is “way behind the curve in terms of lowering rates” compared with other central banks around the world. Those comments, combined with continued momentum and market leadership from the AI trade, boosted sentiment and lifted the S&P 500 to a record close despite a fresh consumer confidence reading that missed expectations.4
Christmas Eve brought more of the same, kicking off what’s known as the “Santa Claus rally” period—the last five trading days of the year and the first two trading days of the new year. The S&P hit new intraday and closing highs on Wednesday’s shortened trading day—its fifth consecutive session of gains.5
While stocks largely went sideways on Friday amid thin holiday volume. The S&P 500 hit another intraday high, and all three major averages posted weekly gains. It was the S&P’s fourth weekly gain in five weeks.6
GDP Jumps
The delayed Q3 gross domestic product report was released on Tuesday, showing that the economy grew at an annualized 4.3 percent rate. That number beat expectations by more than a full percentage point and marked the strongest economic growth in two years.7
While it didn’t garner many headlines, another metric released on the same day told a similar story. Industrial production grew 2.5 percent year over year in November—the highest annualized increase since September 2022 and nearly triple what it was at the start of 2025.8
Footnotes And Sources
- WSJ.com, December 26, 2025
2. Investing.com, December 26, 2025
3. CNBC.com, December 22, 2025
4. CNBC.com, December 23, 2025
5. CNBC.com, December 24, 2025
6. CNBC.com, December 26, 2025
7. WSJ.com, December 23, 2025
8. KPMG.com, December 23, 2025
