Quiet Post-Christmas Trading Leaves Stocks Flat as Markets Eye Santa Rally

U.S. equities were little changed on Friday in a quiet, low volume session following the Christmas holiday, with a lack of major catalysts keeping trading subdued. All three major indexes finished modestly lower on the day, snapping a short rally, but still closed the week with solid gains.

The S&P 500 briefly touched a new intraday high before ending down 0.03 percent at 6,929.94. The Nasdaq Composite fell 0.09 percent to 23,593.10, while the Dow Jones Industrial Average slipped 0.04 percent to 48,710.97. For the week, the S&P 500 gained roughly 1.4 percent, marking its fourth advance in five weeks, and both the Dow and Nasdaq rose more than 1 percent, remaining near record levels.

Investors are now focused on the seasonal Santa Claus rally, which began earlier this week and runs through the final five trading days of the year and the first two sessions of January. Historically, this period has been favorable for equities and is often viewed as a constructive signal for the year ahead.

With just a few trading days left in the year, markets are on track to deliver double-digit annual gains across all three major indexes, led by the tech heavy Nasdaq. The year has been volatile at times, shaped by tariff uncertainty, ongoing geopolitical tensions, and strong momentum in artificial intelligence related stocks, but the overall trend has remained positive.

Sector performance was mixed on Friday, with materials leading and consumer discretionary lagging. On a year-to-date basis, communication services, technology, and industrials have outperformed the broader market, while real estate is the only sector trending toward a loss for the year.

In individual stocks, Nvidia rose about 1 percent following news tied to a licensing deal with AI startup Groq, while Target climbed more than 3 percent amid reports of hedge fund interest. Precious metal miners also rose as gold and silver prices hit fresh highs.

Market breadth skewed negative, particularly on the Nasdaq, and trading volume remained well below recent averages, underscoring the holiday thinned nature of the session.

Looking ahead, investors are hoping the U.S. equity market can finish 2025 on a strong note, with stocks sitting at record highs and within reach of additional milestones as the year draws to a close. Attention in the holiday shortened week ahead will turn to the release of minutes from the Federal Reserve’s latest policy meeting, while year end portfolio rebalancing could introduce pockets of volatility, especially given how lighter trading activity can amplify price swings.

As markets move toward the new year, expectations around the Federal Reserve’s next steps on interest rates remain a central focus. The Fed has lowered its benchmark rate by a total of 75 basis points over its past three meetings, bringing it to a range of 3.50 percent to 3.75 percent, but the most recent quarter point cut in December was not unanimous. Policymakers also offered a wide range of views on the path for rates in the year ahead, making the upcoming meeting minutes potentially important for gauging internal debate.

In addition, investors are watching closely for any signals around the President’s choice for the next Federal Reserve chair, as Jerome Powell’s term concludes in May. Any clarity on that decision could influence market sentiment in the days ahead.