Stocks Push To Record Highs As Santa Rally Takes Hold

Global equity markets closed at record highs on Christmas Eve as the traditional “Santa rally” gathered momentum, supported by easing rate expectations, thinning holiday liquidity, and steady inflows into risk assets.

U.S. benchmarks led the move, with the S&P 500 and Dow Jones Industrial Average ending the shortened session at fresh all-time highs. Trading volumes were light, but price action remained firmly bid, reflecting strong year-end positioning and reduced willingness among investors to fade the rally.

The advance was driven by a combination of factors. Softer inflation trends and recent central-bank guidance have reinforced expectations that monetary policy will ease further in 2026, keeping financial conditions supportive. At the same time, fund managers appeared focused on year-end performance, adding exposure to equities rather than reducing risk.

European markets followed the positive tone earlier in the day, while Asian equities also finished higher as global sentiment improved. Cyclical sectors and large-cap tech stocks continued to attract flows, while defensives lagged amid the risk-on backdrop.

In FX markets, the U.S. dollar traded lower against major peers as yield pressures eased. The euro and pound posted modest gains, while commodity-linked currencies benefited from improved sentiment. Gold edged higher, supported by falling real yields and lingering macro uncertainty, despite reduced demand for safe havens.

For traders, the session reinforced a familiar year-end dynamic: with liquidity thin and positioning skewed, upside moves can extend further than fundamentals alone might justify. Attention now shifts to whether the rally can persist into the first trading sessions of the new year or gives way to profit-taking once normal liquidity returns.