New York Stock Exchange, can it usher in a "Santa Claus rally"… focusing on AI technology stocks and US GDP

As the end of the year approaches, whether the New York stock market can achieve the so-called “Santa Claus rally” is drawing attention. The Santa Claus rally typically refers to the phenomenon where the stock market tends to perform strongly during the last 5 trading days of December and the first 2 trading days of the new year. This year’s corresponding period is from December 24 to January 5.

According to market research firm Stock Trader’s Almanac, the S&P 500 has averaged a 1.3% increase during this period since 1950, with approximately a 79% probability of gains. However, last year, with the Federal Reserve’s tightening stance strengthening, the Santa Claus rally did not occur. Whether the current upward momentum led by technology stocks can continue also remains a key variable.

Recently, market expectations and concerns surrounding artificial intelligence have intertwined in the stock market. Earnings reports from Oracle and Broadcom have fueled debates over AI overheating, while Micron Technology’s “surprise earnings” have helped restore investor confidence. Experts point out that technology stocks now account for 30% of the S&P 500, and if some core stocks fail to drive up prices, the year-end rally may be difficult to realize.

However, some believe that the traditional price pattern in December—characterized by volatility at the beginning of the month and lows in mid-month—may actually be a typical process for brewing a rally. If earnings and supply-demand factors have positive effects, the market also has expectations of surpassing the average historical gains. Some institutions, based on strong confidence in AI technology, believe that the rally driven by IT stocks could continue into the end of the year.

Meanwhile, key economic indicators to be released at the end of this month are also seen as influential factors. The U.S. third-quarter GDP growth rate, originally scheduled for October, was delayed to December 23 due to the federal government shutdown. This GDP data will be the first official release and may serve as a clue for judging the market’s future direction. On the same day, data on private employment, industrial production, and consumer confidence will also be released, which are expected to be key in assessing the overall economic trend for the week.

Traditionally, the Santa Claus rally occurs when corporate earnings, economic outlook, and investor sentiment are aligned. The Federal Reserve is currently considering rate cuts to create a loose environment, but overly high valuations could also become a burden. These trends are expected to be critical factors in determining whether the stock market can sustain its late-year strength, depending largely on the future performance of major technology stocks and economic indicators.