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Technology took a back seat but was still among the 10 stock market sectors in the green to begin a holiday-shortened trading week on Wall Street. The bidding war for a media property has escalated, and a new era for a widely held investment vehicle also contributed to risk-on cheer.
“The Santa Claus rally is building,” Louis Navellier of Navellier & Associates writes, as all three main equity indexes traded up together for a second straight session and gold and silver also hit new all-time highs. “The concerns about the AI narrative continue to ease, seen in the further moves up in Nvidia (NVDA, +1.5%) and Oracle (ORCL, +3.3%).”
Navellier cites earnings and guidance from Micron Technology (MU, +4.0%) after the closing bell last Wednesday as the key to the turnaround. The tech stock is up 22.6% since December 17, NVDA 7.5% and ORCL 8.4%.
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The earnings calendar is completely silent this holiday week, while the economic calendar includes the release of third-quarter GDP data as well as initial claims for unemployment insurance.
Utility stocks held on for modest gains, energy led the way higher, and only consumer staples stocks were in the red on Monday. “Over the last five days,” Navellier observes, “momentum and growth names are leading, with dividend names trailing as hopes for further Fed cuts soon remain weak.”
The Cboe Volatility Index (VIX) – the market’s “fear index” – has declined to near its lows for the year around 14 after a November 20 spike as high as 28.27. Federal funds rate futures pricing reflects an 80.1% probability the target range for the key interest rate will remain 3.50% to 3.75% after the next Fed meeting.
Small-cap stocks have been leading the market over the last month in a “sign of optimism” about next year, Navellier says. “The trend is our friend, 2026 looks to have a strong start, and a potential Santa Claus rally is back on the table.” The Russell 2000 was up as much as 1.7% on Monday.
By Monday’s closing bell, the broad-based S&P 500 was up 0.6% to 6,878, the tech-heavy Nasdaq Composite had added 0.5% at 23,428, and the blue-chip Dow Jones Industrial Average was up 0.5% to 48,362.
QQQ is only now a real ETF (I know, right?)
The Invesco QQQ Trust (QQQ, +0.5%), one of the most widely held investment vehicles on Earth, is now officially what most of us recognize as a traditional exchange-traded fund (ETF).
On Friday, Invesco (IVZ, +1.2%) announced that shareholders approved proposals to restructure QQQ (pdf) from a unit investment trust ETF to an open-end fund ETF and to change its governance structure to a board of trustees.
As Tony Dong explains, “The UIT model, an older structure that predates ETFs, comes with strict limitations. UITs can’t reinvest dividends or alter their portfolios once set, and they must replicate the benchmark exactly.”
Another big benefit of the move if you own QQQ is a reduced expense ratio, from 0.20% to 0.18%. Every little bit counts, especially when it comes to the rule of compounding.
Invesco notes as well that the new structure will result in enhanced reporting, including semi-annual updates and increased board oversight. Critically, the change was made without triggering tax consequences for investors who own QQQ. The change should be relatively seamless for existing QQQ holders.
QQQ started trading as an open-end ETF on Monday. The ETF will continue to track the Nasdaq 100.
Larry Ellison is all in for WBD
Most of the market’s dramatic energy came from communication services stocks on Monday, with Paramount Skydance (PSKY, +4.3%) and Warner Bros. Discovery (WBD, +3.5%) up but Netflix (NFLX, -1.2%) down after Oracle co-founder and executive chairman Larry Ellison personally guaranteed PSKY’s $40.4 billion bid for WBD.
Last week, WBD’s board recommended that shareholders reject PSKY’s hostile, $30 per share all-cash bid to buy all of Warner Bros. Discovery in favor of NFLX’s offer, citing uncertainty about financing for the former.
On December 5, NFLX agreed to buy WBD’s studio and its HBO Max streaming business for $72 billion, or $27.75 a share in cash and stock.
The Wall Street Journal reported on Monday that Netflix is “laying the foundation” to complete a deal and has established a new $5 billion senior unsecured revolving credit facility and two senior unsecured delayed-draw term-loan facilities totaling $20 billion.