Tech Rally Lifts Markets Into Year-End as AI Trade Regains Momentum

U.S. equities closed the final full trading week of the year on a constructive note, with technology stocks extending their late-week rally and helping the broader market finish firmly higher. Solid participation across sectors reinforced the advance, even as some late-session profit-taking emerged.

The S&P 500 gained 0.9% and the Nasdaq Composite rose 1.3%, with both indices reclaiming their 50-day moving averages and ending the week modestly in positive territory. The Dow Jones Industrial Average added 0.4% on the day but finished the week slightly lower. Smaller-cap benchmarks also participated, as the Russell 2000 and S&P MidCap 400 each advanced 0.9%.

Entering the session, there were questions about whether stocks could build on the tech-driven rebound after Thursday’s late pullback. Those concerns faded quickly as the information technology sector surged 2.0%, providing decisive leadership. Micron extended its post-earnings rally, while memory and storage peers Sandisk and Western Digital pushed sharply higher after Micron’s results delivered an upbeat outlook for industry demand.

Oracle was another standout, rallying on headlines that TikTok agreed to sell its U.S. operations to a consortium that includes Oracle. Separately, Michigan regulators approved a request from DTE Energy to supply power to a data center tied to Oracle and OpenAI, adding further support to the stock. NVIDIA also turned in a strong performance, helping drive a 3.0% gain in the PHLX Semiconductor Index and signaling improved sentiment across the AI complex.

While market breadth was strong for much of the session, some afternoon selling echoed the prior day’s pattern. Even so, seven S&P 500 sectors finished higher. Industrials advanced 0.9%, aided by a rally in defense stocks after President Trump told NBC News he was not ruling out military action against Venezuela, lifting aerospace and defense names broadly.

Health care added 0.7%, supported by pharmaceutical and biotech stocks after the White House confirmed nine new agreements with major drugmakers aimed at lowering prescription drug prices in the U.S. Gilead Sciences, Amgen, and Merck were among the companies involved.

Defensive areas lagged the risk-on tone. Utilities fell 1.3% and consumer staples declined 0.5%. Lamb Weston was the weakest stock in the S&P 500, sliding sharply despite beating earnings estimates, raising its dividend, and reaffirming guidance.

Consumer discretionary also finished lower, down 0.3%, reflecting mixed earnings reactions. Carnival rallied strongly after an earnings beat and upbeat guidance, lifting other cruise operators, while Nike dropped sharply on disappointing guidance and soft demand in China. KB Home’s earnings miss weighed on homebuilders and related retail names, including Lowe’s.

Despite some late-day consolidation, the information technology sector closed at session highs, underscoring renewed strength in the AI trade. The late-week advance leaves the major indices in a technically improved position after reclaiming key moving averages, setting a firmer foundation as markets head into the final stretch of the year.

Our FTinvest 11 model portfolio closed lower in today’s session, declining 0.69% to finish at 925.58, as the portfolio gave back part of its recent gains amid a more cautious tone across the broader market.

The index struggled to maintain early stability and gradually drifted lower as selling pressure increased into the close. Unlike prior sessions that saw selective leadership cushion downside moves, today’s weakness was more evenly distributed, limiting the portfolio’s ability to offset declines through relative strength in individual components.

Despite the pullback, FTinvest 11 remains near its recent highs, and the move appears consistent with short-term consolidation following a strong run. Broader market conditions continue to be defined by rotation and selective profit-taking rather than a decisive shift in trend, suggesting that today’s decline reflects normalization rather than a breakdown in momentum.

Overall, the session marked a pause in FTinvest 11’s advance, with the index holding comfortably above key recent levels as investors reassess positioning heading into the next set of market catalysts.