Dow Jones Industrial Average climbs as equities rally into holiday-shortened week
- The Dow Jones rose around 250 points to start a holiday-shortened week.
- Equities are broadly bullish heading into the tail-end of 2025.
- US ADP labor changes and US GDP data in the pipe this week.
The Dow Jones Industrial Average (DJIA) gained ground on Monday, heading into the Christmas holiday schedule on the front foot as equity markets tilt into the bullish side to wrap up the trading year. Stocks tied to the AI trade rose, with big boosts coming from both the financial and materials sectors.
Stocks rally to wrap up 2025
Equity markets are twisting into the high side to wrap up the remainder of the 2025 trading window in hopes of sparking a last-minute Santa Clause rally, but time is running out with stock markets slated to be shuttered early this week. The New York Stock Exchange (NYSE) will be closing early at 1800 GMT (1300 EST) on Wednesday. Volatility could rise heading through the holidays, but overall market momentum is likely to remain muted into the new year as investors sideline themselves.
Following the Federal Reserve’s (Fed) third straight interest rate cut earlier this month, ‘real economy’ stocks are taking a step higher, with the construction materials sector climbing nearly 1.5% on Monday. The banking segment also rose 1.3% as financials take a step higher on hopes for further interest rate easing.
Data reactions remain muted following shutdown data gap
Overall market reaction to the latest inflation figures remains muted, despite a headline easing in key inflation figures. Looking deeper into the latest Consumer Price Index (CPI) report, market trepidation at the numbers is a given: The US government’s long-winded shutdown early in the fourth quarter suspended data collection at federal agencies, sparking a void in key inflation datapoints. Specifically, rents and shelter cost inflation clocked in at 0.0% for the latest reporting period, a functional impossibility as US housing remains in what most analysts refer to as an ‘affordability crisis’.
Despite eagerly leaning into further rate-cut expectations, investors are holding off on making any decisions on the back of the latest CPI inflation report, which is broadly chalked up as a wash for many analysts thanks to the shutdown data void. Policymakers at the Fed will likely view the latest inflation figures with the same level of skepticism.
US ADP Employment change and Gross Domestic Product (GDP) growth figures are due on Tuesday and will serve as the final spurt of US economic data before the holiday shutdown. The ADP 4-week average last clocked in at a relatively disappointing 16.25K, implying that ongoing weakness in the US labor market is likely to continue. On the growth front, Annualized US GDP for the third quarter is expected to slow to 3.2% from 3.8%, flying in the face of Trump administration staff who have been suggesting that American growth could accelerate to 4-5% heading into the end of the year.
Dow Jones daily chart
AI stocks FAQs
First and foremost, artificial intelligence is an academic discipline that seeks to recreate the cognitive functions, logical understanding, perceptions and pattern recognition of humans in machines. Often abbreviated as AI, artificial intelligence has a number of sub-fields including artificial neural networks, machine learning or predictive analytics, symbolic reasoning, deep learning, natural language processing, speech recognition, image recognition and expert systems. The end goal of the entire field is the creation of artificial general intelligence or AGI. This means producing a machine that can solve arbitrary problems that it has not been trained to solve.
There are a number of different use cases for artificial intelligence. The most well-known of them are generative AI platforms that use training on large language models (LLMs) to answer text-based queries. These include ChatGPT and Google’s Bard platform. Midjourney is a program that generates original images based on user-created text. Other forms of AI utilize probabilistic techniques to determine a quality or perception of an entity, like Upstart’s lending platform, which uses an AI-enhanced credit rating system to determine credit worthiness of applicants by scouring the internet for data related to their career, wealth profile and relationships. Other types of AI use large databases from scientific studies to generate new ideas for possible pharmaceuticals to be tested in laboratories. YouTube, Spotify, Facebook and other content aggregators use AI applications to suggest personalized content to users by collecting and organizing data on their viewing habits.
Nvidia (NVDA) is a semiconductor company that builds both the AI-focused computer chips and some of the platforms that AI engineers use to build their applications. Many proponents view Nvidia as the pick-and-shovel play for the AI revolution since it builds the tools needed to carry out further applications of artificial intelligence. Palantir Technologies (PLTR) is a “big data” analytics company. It has large contracts with the US intelligence community, which uses its Gotham platform to sift through data and determine intelligence leads and inform on pattern recognition. Its Foundry product is used by major corporations to track employee and customer data for use in predictive analytics and discovering anomalies. Microsoft (MSFT) has a large stake in ChatGPT creator OpenAI, the latter of which has not gone public. Microsoft has integrated OpenAI’s technology with its Bing search engine.
Following the introduction of ChatGPT to the general public in late 2022, many stocks associated with AI began to rally. Nvidia for instance advanced well over 200% in the six months following the release. Immediately, pundits on Wall Street began to wonder whether the market was being consumed by another tech bubble. Famous investor Stanley Druckenmiller, who has held major investments in both Palantir and Nvidia, said that bubbles never last just six months. He said that if the excitement over AI did become a bubble, then the extreme valuations would last at least two and a half years or long like the DotCom bubble in the late 1990s. At the midpoint of 2023, the best guess is that the market is not in a bubble, at least for now. Yes, Nvidia traded at 27 times forward sales at that time, but analysts were predicting extremely high revenue growth for years to come. At the height of the DotCom bubble, the NASDAQ 100 traded for 60 times earnings, but in mid-2023 the index traded at 25 times earnings.
Author
Joshua Gibson
FXStreet
Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.
