US stocks rose on Monday, kicking off a shortened holiday week on a firmer footing as gains in technology shares lifted the broader market.
The S&P 500 advanced 0.5%, while the Dow Jones Industrial Average rose 133 points, or 0.3%.
The Nasdaq Composite outperformed, climbing 0.7% as investors returned to growth-oriented names after recent sector rotation.
Technology and AI stocks drive early gains
Key stocks tied to artificial intelligence provided much of the market’s upward momentum.
Nvidia shares rose 1% after Reuters reported that the company is aiming to begin shipments of its H200 artificial intelligence chips to China by mid-February.
The development helped revive sentiment around the AI trade, which had come under pressure earlier in the month amid valuation concerns.
Other semiconductor and cloud infrastructure names also moved higher.
Micron Technology gained nearly 2.5%, while Oracle added more than 1%, reflecting renewed interest in companies seen as central to the build-out of AI-related computing capacity.
The early-week rally follows a mixed performance for major indexes last week.
A late surge in technology stocks helped lift the S&P 500 and Nasdaq Composite to their third winning week in four, with gains of 0.1% and 0.5%, respectively.
In contrast, the Dow Jones Industrial Average fell 0.7%, snapping a three-week winning streak after having outperformed earlier in the month.
Artificial intelligence-linked stocks staged a notable rebound last week after a period of underperformance.
Oracle, which had been a significant laggard, jumped after news that TikTok agreed to sell its US operations to a new joint venture that includes the software company and private equity firm Silver Lake.
Nvidia shares also recovered, helping stabilise sentiment across the sector.
Despite the rebound, investors remain cautious about whether AI stocks can maintain their leadership into year-end.
Some market participants have been rotating into cheaper areas of the market amid concerns that valuations for large-cap technology companies have become stretched.
There is also uncertainty over whether a traditional “Santa Claus rally” will materialise, particularly as the S&P 500 has struggled to hold a key technical level in recent sessions.
Trading volumes are expected to thin as the holiday approaches. The New York Stock Exchange will close early on Wednesday at 1 p.m. ET on Christmas Eve and will be closed Thursday in observance of Christmas Day.
Analysts remain bullish
Looking beyond the near-term holiday period, several strategists remain constructive on the outlook for US equities.
UBS said the powerful rally seen in 2025 could extend into next year, supported by earnings growth, easing monetary policy and improved policy clarity.
Strategists at the bank argued that recent gains have been driven primarily by profits rather than excessive valuation expansion.
UBS expects earnings per share for the S&P 500 to rise about 10% in 2026, a pace it believes could push the index to around 7,700 by the end of next year.
“While some may worry investor reticence signals deeper trouble, we see multiple catalysts ahead that should help reignite equity market momentum into early 2026,” the bank said in a note to clients.
The firm also anticipates further interest-rate cuts following the Federal Reserve’s third consecutive reduction in December, with another move possible in the first quarter of 2026.
UBS added that the naming of a new Fed chair in January, replacing outgoing chair Jerome Powell, could reinforce a more dovish policy stance, citing recent comments from potential candidates.
Broader Wall Street sentiment remains optimistic. According to the 2026 CNBC Market Strategist Survey, top strategists on average expect the S&P 500 to end next year at 7,629, implying roughly 11.6% upside from current levels.
The median target of 7,650 suggests potential gains closer to 13%.
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