The S&P 500 and the Nasdaq rose Monday, as investors looked ahead to an anticipated Federal Reserve interest rate cut later in the week as well as several key data releases for clues on monetary policy next year.
The Fed's final rate decision of the year is due on Wednesday, with traders pricing in an over 99% chance of a 25 basis point rate reduction, as per CME's FedWatch.
Most megacap and growth stocks traded higher, with Google-parent Alphabet up 3.8% and Amazon.com rising 1.3%, boosting communication services and consumer discretionary sectors about 1.5% each.
Both the Nasdaq 100 and the Nasdaq Composite touched fresh record highs, while the small-cap Russell 2000 jumped 0.8%.
"The Nasdaq 100 has hit a fresh record high, and small-caps are in demand, as the final year-end chase gets underway, this is the 'Santa rally' almost right on cue," said Chris Beauchamp, chief market analyst at online trading platform IG.
Ahead of the Fed decision, investors awaited Tuesday's retail sales data and other key releases scheduled throughout the week.
With a rate cut all but priced in, investors' primary focus will be on policymakers' outlook for next year as bets moderate on the pace of rate cuts amid strong economic growth and persistent inflation.
"The S&P's year-to-date 26.86% gain far exceeds the average 10.05% annual gain since 1995 ... this jampacked week of important economic figures along with the FOMC meeting could be the game changer," said Mark Malek, CIO at Siebert Financial.
Stocks have overall had a bumper run in 2024 as gains in artificial intelligence-related companies, the start of the Fed's rate cutting cycle and expected pro-business policies from Donald Trump's incoming administration have lifted equities.
S&P Global's December flash PMI showed manufacturing activity stood at 48.3, while services activity was at 58.5, above estimates of 55.7.
At 12:13 p.m. the Dow Jones Industrial Average fell 5.04 points, or 0.01%, to 43,823.02, the S&P 500 gained 24.04 points, or 0.40%, to 6,075.13 and the Nasdaq Composite gained 181.44 points, or 0.91%, to 20,108.16.
Yields on the benchmark 10-year Treasury briefly eased from an over three-week high before creeping back above 4.4%.
Honeywell International gained 3.3% after the industrial conglomerate said it was exploring a separation of its aerospace business.
Tesla leapt 5.4% after Wedbush Securities raised its price target on the stock to a Wall Street high of $515.
Crypotocurrency stocks rose as bitcoin jumped above $106,000 after Trump suggested he plans to create a U.S. bitcoin strategic reserve, and bitcoin buyer MicroStrategy was set to join the Nasdaq 100 index.
MicroStrategy jumped 5%, while bitcoin miner MARA Holdings gained 8.8%.
Super Micro Computer, among those set to be removed from the Nasdaq 100, dropped 6.9%.
Advancing issues outnumbered decliners by a 1.13-to-1 ratio on the NYSE and a 1.34-to-1 ratio on the Nasdaq.
The S&P 500 posted 12 new 52-week highs and 14 new lows, while the Nasdaq Composite recorded 85 new highs and 141 new lows.