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(Bloomberg) — The holiday-shortened week started with stocks moving higher in a broad advance that saw renewed appetite for the artificial-intelligence trade. Oil and gold rallied as the dollar fell.

Equities erased their December losses, with the S&P 500 set for an eighth straight up month – the longest winning run since 2018. About 400 of its shares advanced, with Tesla Inc. and Nvidia Corp. leading megacaps higher. A gauge of smaller firms climbed nearly 1.5%.

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Photographer: Michael Nagle/Bloomberg Photographer: Michael Nagle/Bloomberg

Despite bouts of volatility and concerns about the AI trade, tech has led the market to the upside this year, and it will probably be the difference between a positive and negative December, said Chris Larkin at E*Trade from Morgan Stanley.

“If a Santa Claus rally does kick in this year, St. Nick’s gift bag will likely need to be full of positive tech sentiment,” he noted.

It’s been a strong year for stocks and the big question is whether investors will carry that bullish mood into 2026.

Positioning in equities is rising and fund managers are maintaining record low levels of cash. Their expectations of a further rally are outweighing concerns over rich valuations. The Federal Reserve path is also being closely watched, with two US cuts priced for next year.

Fed Governor Stephen Miran told Bloomberg Television the central bank risks sparking a recession unless it continues lowering rates next year.

The S&P 500 hovered near 6,865. The yield on 10-year Treasuries rose two basis points to 4.17%. The dollar halted a three-day advance. Bitcoin climbed to around $90,000.

Oil rallied while gold and silver jumped to all-time highs amid geopolitical tensions.

Buoyed by tech, the long-term valuation ratio of the S&P 500 is now at an all-time high. This metric has exceeded previous peaks that preceded major drawdowns, such as in the summer of 2000 before the dotcom crash, or in January 2022 when the market started to price a surge in interest rates.

“While 2025 was a volatile year with April’s tariff-driven correction, we don’t think we’re out of the woods when it comes to volatility for 2026,” said Clark Bellin at Bellwether Wealth.

While Bellin expects the tech sector to continue its corrective phase, he bets on a bottom sometime in the next few months. He also sees the Fed refraining from rate cuts until there’s a new chair mid-year, but says stocks can move higher during this time even without additional rate cuts.

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Equity investor sentiment was bullish for a third straight week, although the gap over more pessimistic views has narrowed slightly, according to Deutsche Bank AG strategists.

The team including Parag Thatte said aggregate equity positioning declined last week, but remains modestly overweight.

Meantime, Goldman Sachs Group Inc. strategists led by Ben Snider noted the bank’s baseline macro outlook is “supportive for small-cap upside in early 2026.”

“We do not believe markets are fully pricing the likely strength of the US economy next year, and small-caps typically outperform during cyclical rallies,” they wrote.

Sell-side strategists have issued year-end targets for the S&P 500 that are clustered the tightest in almost a decade, according to data compiled by Bloomberg. With the highest forecast from Oppenheimer & Co. at 8,100 and the lowest from Stifel Nicolaus & Co. at 7,000, the gap in their annual outlook is just 16%.

Such lockstep views are generally considered a contrarian signal — when everyone’s leaning the same way, the imbalance often rights itself. They also come at a time when market risks are visible. Still, strategists on average see more gains for stocks in 2026, even after three straight years of double-digit returns.

“Can the market hold up if AI enthusiasm and a dovish Fed aren’t helping it?” said Tom Essaye at The Sevens Report. “The answer is yes, but only as long as economic growth stays solid.”

Essaye noted that there was a data deluge last week, and the net result was that economic data and inflation remain “Goldilocks enough to help support stocks.”

In the run-up to Tuesday’s reading on the economy, Bloomberg Economics estimates the US likely grew more than 3% in the third quarter, supported by robust consumer spending and modest investment gains — defying headwinds from tariff-related uncertainty.

“The incoming economic data is second-tier at best, a fact that further reinforces the notion that rates will stay in an all-too-familiar territory as 2026 quickly approaches,” said Ian Lyngen at BMO Capital Markets.

WATCH: Fed Governor Stephen Miran says the central bank risks sparking a recession without more rate cuts.Source: Bloomberg WATCH: Fed Governor Stephen Miran says the central bank risks sparking a recession without more rate cuts.Source: Bloomberg

Corporate Highlights:

  • OpenAI has squeezed better margins out of its paid products this year, as it races to maintain its pole position in artificial intelligence, according to a report in The Information.

  • Nvidia Corp. has told Chinese clients it aims to ship its second-most powerful AI chips to China by mid-February, Reuters reported, citing people familiar with the matter.

  • Meta Platforms Inc.’s Threads will launch podcast previews, or the ability to upload snippets of shows that play directly in user feeds, as part of a broader effort to encourage podcasters and their fans to spend more time on the social network, according to a person familiar with the plans.

  • Netflix Inc. refinanced part of a $59 billion bridge loan with cheaper and longer-term debt, bolstering the financial package underpinning its bid for Warner Bros. Discovery Inc.

  • Paramount Skydance Corp. amended its bid for Warner Bros. Discovery Inc., including by offering a personal financial guarantee by Oracle Corp. Chairman Larry Ellison, as it seeks to beat out a rival bid from Netflix Inc.

  • JPMorgan Chase & Co. is considering offering cryptocurrency trading to its institutional clients, as large banks around the world deepen their involvement in the asset class.

  • Uber Technologies Inc. and Lyft Inc. are each teaming up with Baidu Inc. to trial driverless taxis in the UK, as ride-sharing companies race to deploy autonomous services around the world.

  • Nelson Peltz’s Trian Fund Management and General Catalyst agreed to buy asset manager Janus Henderson Group Plc for about $7.4 billion.

  • A group of private equity firms led by Permira and Warburg Pincus has agreed to acquire Clearwater Analytics Holdings Inc. in a deal valuing the investment and accounting software maker at $8.4 billion including debt.

  • Cintas Corp. proposed a renewed takeover bid of UniFirst Corp. worth about $3.96 billion in equity in another attempt to buy out the rival uniform maker.

  • Telecom Italia SpA’s board approved a proposal to convert the company’s savings shares into ordinary stock and to reduce its share capital, a long-delayed change that would simplify its capital structure.

  • Telefonica SA will book a cost of €2.5 billion ($2.9 billion) to pay for the exit of about 5,500 employees as part of a sweeping cost-reduction plan.

  • Roche Holding AG Chief Executive Thomas Schinecker said the new US drug deal signed last week could raise prices for some medicines in Switzerland.

  • Harbour Energy Plc agreed to acquire LLOG Exploration Co. for $3.2 billion, marking the UK company’s entry into the deepwater US Gulf of Mexico.

  • JAB Insurance has agreed to buy the UK life and pensions business of Utmost Group, the latest entry into the booming risk-transfer market for British retirement plans.

  • China Vanke Co., once the country’s biggest developer before it succumbed to an unprecedented property crisis, won last-minute support from creditors to extend a bond grace period in a reprieve that helps it avoid default, at least for now.

  • Nippon Life Insurance Co. is studying further acquisition opportunities abroad after spending more than $12 billion on a string of deals a year ago, the company’s top executive said.

  • Cathay Pacific Airways Ltd. expects its 2025 net income to outpace the previous year’s, the company said in a filing Monday, putting it on track to post its first consecutive annual profit growth in a decade.

WATCH: Gold hits all-time highs amid geopolitical tensions.Source: Bloomberg WATCH: Gold hits all-time highs amid geopolitical tensions.Source: Bloomberg

Some of the main moves in markets:

Stocks

  • The S&P 500 rose 0.5% as of 10:30 a.m. New York time

  • The Nasdaq 100 rose 0.5%

  • The Dow Jones Industrial Average rose 0.4%

  • The Stoxx Europe 600 fell 0.3%

  • The MSCI World Index rose 0.5%

  • Bloomberg Magnificent 7 Total Return Index rose 0.4%

  • The Russell 2000 Index rose 1.3%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.4%

  • The euro rose 0.5% to $1.1763

  • The British pound rose 0.5% to $1.3451

  • The Japanese yen rose 0.4% to 157.08 per dollar

Cryptocurrencies

  • Bitcoin rose 1.6% to $89,546.5

  • Ether rose 2.3% to $3,040.53

Bonds

  • The yield on 10-year Treasuries advanced two basis points to 4.17%

  • Germany’s 10-year yield advanced two basis points to 2.91%

  • Britain’s 10-year yield advanced one basis point to 4.54%

  • The yield on 2-year Treasuries advanced two basis points to 3.50%

  • The yield on 30-year Treasuries advanced two basis points to 4.84%

Commodities

  • West Texas Intermediate crude rose 2.5% to $57.96 a barrel

  • Spot gold rose 1.8% to $4,418.94 an ounce

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