[New York Stock Market Briefing] 'Santa Rally' Coming... All Three Major Indices Jump in New York Stock Market

All three major indices in the New York Stock Market rose together. The November Personal Consumption Expenditures (PCE) price index came out higher than market expectations, pushing the indices up. Concerns about a government shutdown, which had grown after the U.S. federal government's temporary budget was rejected in the House, were calmed as House Speaker Mike Johnson took action to address the issue.

On the 20th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 42,840.26, up 498.02 points (1.18%) from the previous trading day. The Standard & Poor's (S&P) 500 Index rose 63.77 points (1.09%) to 5,930.85, and the Nasdaq Composite increased by 199.83 points (1.03%) to 19,572.60. It has been 11 trading days since all three major indices closed up together.

The indices surged thanks to the November PCE. The PCE is the inflation index most favored by the Federal Reserve. The U.S. Department of Commerce announced that the November PCE rose 0.1% from the previous month and 2.4% from the same period last year. These figures are 0.1 percentage points lower than market expectations (0.2%↑·2.5%↑). The core PCE, excluding volatile food and energy, rose 0.1% from the previous month and 2.8% from the same period last year, also lower than market expectations.

Austin Goolsbee, President of the Chicago Federal Reserve Bank, noted that the November PCE fell short of market expectations, calling it a "positive signal that inflation is moving toward the Fed's target (2%)." He added, "Even if the rate cut next year is narrower than this year, there is no change in the belief that the Fed will lower the policy rate to a reasonable level."

Concerns about a government shutdown due to the budget rejection also eased. The U.S. House of Representatives voted on a new temporary budget reflecting the demands of the second Trump administration, rejecting it with 174 in favor and 235 against. If no alternative is prepared by midnight, federal government functions could be temporarily paralyzed.

However, Speaker Johnson held a meeting with Republican lawmakers in the afternoon, stating, "Everyone agreed to 'move forward' and reached an agreement on 'Plan C,'" adding, "The budget will pass, and there will be no government shutdown."

Looking at individual stocks, four out of the seven stocks in the 'Magnificent 7' large tech group, including NVIDIA, rose. NVIDIA increased by 3.08%, Apple by 1.88%, Alphabet (Google's parent company) by 1.54%, and Amazon by 0.73%.

Apple, the company with the highest market capitalization, hit an all-time high during the day, rising to $255.00. It also set a new record at the closing price of $254.49. Apple's market cap is $3.846 trillion.

Carnival, a cruise operator, saw its stock rise by 6.43% as it presented strong demand for 2025 and 2026 along with better-than-expected fourth-quarter results. Occidental Petroleum's stock rose by 3.9% on news that Warren Buffett's Berkshire Hathaway had increased its stake.

On the other hand, U.S. Steel, which is expected to see its sale plan by Nippon Steel ultimately fall through, issued weak fourth-quarter guidance, causing its stock to fall by 4.98%. Microsoft fell by 0.1%, Tesla by 3.46%, and Meta (Facebook's parent company) by 1.73%.

By sector, all 11 sectors that make up the S&P 500 rose, with seven sectors, including real estate (1.82%), technology (1.53%), utilities (1.53%), and finance (1.39%), rising by more than 1%.

Tom Fitzpatrick, Managing Director at R.J. O'Brien & Associates, said, "The market showed signs of stabilization today," adding, "I don't see any catalysts for a decline ahead of Christmas and the New Year."

According to the FedWatch tool by CME Group, the probability that the Fed will cut rates by an additional 25 basis points (1bp=0.01% point) in January next year is only 8.6%. On the other hand, the probability of a rate freeze is reflected at 91.4%. The Volatility Index (VIX), compiled by Cboe, was 18.36, down 5.73 points (23.79%) from the previous session.

Yisr0203 Hankyung.com reporter yisr0203@hankyung.com