U.S. stock futures remained close to the flatline Monday evening after Wall Street took a break after an impressive beginning of the holiday-cut trading week. Recent technology and cyclical gains versus valuation apprehensions scrutinized investors, as markets processed new news, including the artificial intelligence momentum, military news, and healthcare news.
Futures based on the Dow Jones Industrial Average slipped a bit, and those based on the S&P 500 were holding steady. The Nasdaq 100 futures made small strides with technology shares, with interest in the technology shares showing a renewed surge.
Lack of volatility in futures trade preceded a widely optimistic trading session on Monday, as the S&P 500 recorded its third straight increase, with markets across most sectors performing well.
Broad Market Gains Driven by Tech and Cyclicals
The S&P 500 ended on an upturn as ten of its eleven industries gained, highlighting the scope of the rally. Materials and financials were the best performers as they enjoyed the rising commodity prices and refreshed investor interest in cyclical exposure.
Newmont and Freeport-McMoRan stock surged by about 3 percent when gold and silver futures soared to all-time highs, and mining stocks rose. The financials also performed well, an ongoing trend that market strategists believe is what makes the current rally stand out compared to the tech-driven explosion of the late 1990s.
The Dow Jones Industrial Average increased by nearly 228 points or 0.5 percent and the Nasdaq Composite increased by 0.5 percent. The gains were indicative of a market that has been resolute despite the current discussions surrounding the valuations and the sustainability of the artificial intelligence-based frenzy.
Nvidia Leads Semiconductor Rebound
The stocks of technology went a notch higher on Monday, and once again the chipmakers were in the limelight. Nvidia jumped 1.5 percent contributing to the wider mood of artificial intelligence infrastructure and semiconductor demand.
Micron and Oracle are also reporting profits, which supports the notion that investor confidence is returning to AI-related businesses following several months of volatility. The recovery comes after a spell of underperformance by some large-cap technology names, with capital spending/profitability issues weighing on valuations.
The market players still evaluate the potential of AI stocks to remain in the lead till the end of the year, yet the recent price movements indicate that investors are ready to reenter the industry selectively.
Market Structure Healthier Than Dot-Com Era, Strategist Says
According to Chris Harvey, the head of equity and portfolio strategy at CIBC Capital Markets, the current market conditions are still inherently healthier than the excesses of speculation witnessed in the dot-com bubble.
In an appearance on the CNBC show Closing Bell, Harvey insisted that the prices have not been inflated to unsustainable levels and that the bull market is not as frothy as it was in the late 1990s. He emphasized the enhanced business base that supports the current technology investments, especially artificial intelligence and cloud infrastructure.
Another point that Harvey made is that recent market gains have been driven not only by technology but also by financial stocks. Such rotation into cyclical sectors implies a more level progress, which decreases the risk of a narrowly focused market that can be quickly corrected.
Financials Gain Ground as Investors Rotate
In recent weeks, there has been a movement of investor preferences with financial stocks surpassing several technology names in terms of performance. According to Harvey, the stock of JPMorgan Chase has outperformed much of the technology industry in the last three and five years, highlighting the resiliency of big financial institutions.
The resurgent focus on financials is consistent with the forecast of robust economic growth and a less volatile interest-rate climate. Banks and other cyclical sectors have become more exposed as investors reconsider risk in 2026, making the market more stable.
This rotation has helped cushion the impact of volatility in high-growth sectors, supporting the S&P 500’s recent winning streak.
Defense Stocks in Focus After Hanwha Ocean Surge
Beyond the major U.S. indexes, news of a defensive nature also won the attention of investors. South Korean shipbuilder Hanwha Ocean increased by 10 percent when former President Donald Trump announced that this company would make warships for the U.S. Navy.
The remarks had increased hope regarding more international cooperation in defense production and the rising global need to acquire naval power. Although the effect on the U.S. markets was indirect, the spike highlighted how geopolitical dynamics remain a major factor in the mood of investors in both industries.
The stock market of defense and aerospace has been at the center of attention due to high global tensions and expenditure on military by the major economies.
Investors Eye Holiday Schedule and Thin Trading
As the holiday season is in progress, investors are expecting to see lighter trading volumes and may experience volatility. On Christmas Eve, the New York Stock Exchange will end the day early, at 1 p.m. ET, and on Christmas Day, the exchange will be closed.
Even when there is no significant news, the diminished liquidity, during holiday periods, can enhance market moves. Consequently, traders are entering the last half of the week with caution, with a portfolio positioning and not over-weighting efforts.
Other factors which market participants are sensitive to include end of year performance considerations and trading which may be affected by tax.
Preparing for 2026 Amid Market Uncertainty
Looking ahead, strategists say the end of the year presents an opportunity for investors to reassess portfolios in preparation for 2026. UBS’s Chief Investment Office recently advised investors to maintain sufficient liquidity while avoiding excessive cash allocations that could erode purchasing power over time.
While yields on cash remain elevated, UBS cautioned that they are unlikely to outpace inflation over the long term. Instead, the firm emphasized balancing defensive positioning with exposure to growth opportunities that could emerge in the coming year.
As markets navigate the final sessions of 2025, investors remain focused on preserving gains while staying alert to potential shocks and opportunities.