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U.S. stocks moved higher Tuesday, kicking off a so-called Santa Claus rally. Investors looked to close out an impressive year for stocks on a high note, powered by renewed bets on Federal Reserve interest-rate cuts and on falling energy prices.
Updated at 12:40 PM EST
Record shot
Stocks are holding solid gains into the early afternoon session, when volumes typically fall-off during holiday trading, with the S&P 500 now up 14 points, or 0.3%, for the day.
The Dow, meanwhile, is up 109 points while the Nasdaq is marked 55 points, or 0.36% into the green.
"With four days left in the year, the S&P 500 still has a shot at hitting a record high and extending its streak of up weeks to nine, which would be its longest run since 2004,
said Chris Larkin, managing director for trading and investing at E*Trade from Morgan Stanley.
" In terms of duration, the current rally has pushed into fairly rare territory. Since 1957, nine of the S&P’s 17 previous eight-week winning streaks pushed to a ninth week, but only three of those made it to 10 weeks," he added.
Updated at 11:30 AM EST
Tesla AI
Tesla TSLA shares are an active mid-day gainer Tuesday following a note from Morgan Stanley's Adam Jonas, who argues Elon Musk's flagship a is both a car company and an AI company.
Related: Tesla higher as Morgan Stanley sees AI potential offsetting margin pressure
Updated at 9:54 AM EST
Biotech deals
Bristol Myers (BMY) -) ended the year with its second major acquisition in three days as it shelled out $4.1 billion for cancer drug specialists RayzeBio following on from Friday's $14.1 billion purchase of Karuna Therapeutics.
More broadly, stocks extended the weekly winning streak, which at eight consecutive advances marks the longest stretch since 2017, with solid early gains as the S&P 500 rose 10 points, or 0.21%, and the Dow added 45 points.
Related: RayzeBio soars; Bristol Myers to pay $4.1 billion in second major buy in 3 days
Stock market today
The Santa Claus rally, typically defined as the five-day trading period from after Christmas through the day after New Year's, has delivered investors an average gain of around 1.3% since the Stock Market Almanac began tracking the timeframe in 1969.
Investors are looking for similar gains this year from the S&P 500, which is up more than 4% so far this month and nearly 16% from its late-October lows, as the broadest measure of U.S. shares looks to test its record close of 4,796.56, reached in early January 2022.
Last week's softer-than-expected reading of the Fed's preferred inflation gauge, the PCE price index, is likely to fuel that run to a record, as data indicated that price pressures last month fell for the first time in three years.
The Fed's favored core reading, meanwhile, is now trending at the central bank's preferred 2% target, based on data compiled over the past six months, cementing the case for spring rate cuts.
The CME Group's FedWatch tool, which tracks trading odds on central bank rate moves, puts the chances of a March cut at around 77%, with the odds of a follow-on move in May pegged at 76.6%.
The new rate assumptions have the U.S. dollar index trading near a five-month low against a basket of its global peers of 101.735. Two-year Treasury note yields are holding at around 4.337%, having shed some 71 basis points since the start of the fourth quarter.
Wall Street is likely to ride the rate-bet momentum again Tuesday, but thin post-holiday trading volumes, as well as major market closures in Europe and Asia, are likely to keep activity muted.
Futures contracts tied to the S&P 500 are indicating a 7 point opening bell gain while those linked to the Dow Jones Industrial Average are priced for a 60 point advance. The tech-focused Nasdaq is called 20 points higher.
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