We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
U.S. stock futures are trading in negative territory to start the last trading day of 2025. Wall Street ended in the negative zone in the last three trading days. Financial researchers are skeptical of a Santa Rally this time.
Wall Street’s rally of U.S. stocks in 2023 and 2024 continued in 2025, albeit at a slow pace. Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — are up 13.7%, 17.3% and 21.5%, respectively.
In 2023, the Dow, the S&P 500 and the Nasdaq Composite rallied 13.7%, 23.3% and 43.4%, respectively. Similarly in 2024, the Dow, the S&P 500 and the Nasdaq Composite advanced 12.9%, 23.3% and 28.6%, respectively.
At this stage, the most important question is whether this more than three years old rally will continue in 2026. A majority of financial analysts and economists are hopeful of a 2026 rally too. The impressive bull run of the past three years had been primarily driven by the global artificial intelligence (AI) technology boom. Generative and agentic AI have transformed the entire landscape of the information technology sector worldwide.
AI Frenzy is Rock Solid
The AI saga, supported by the massive growth of cloud computing and data centers, is yet to fully unfold. This space remains rock solid, supported by an extremely bullish demand scenario. The demand for data center capacity has surged to manage and store the vast amount of cloud computing-based data.
Goldman Sachs and Bank of America projected that AI infrastructure capex spending will cross $1 trillion in 2028. JP Moran and Citigroup forecast this figure to total $5 trillion cumulative in 2030. Research firm McKinsey & Co. estimated that global AI-powered data center infrastructure capex will reach around $7 trillion by 2030.
Four of the “magnificent 7” stocks have decided to invest a massive $380 billion in 2025 as capital expenditure for AI-infrastructure development. This marks a significant 54% year-over-year increase in capital spending on the AI ecosystem. Moreover, these companies have also said that AI capex is likely to increase handsomely in 2026.
Strong Q4 Earnings Expectations
Wall Street analysts are optimistic about fourth-quarter 2025. As of today, 18 S&P 500 companies have reported quarterly financial numbers, which Zacks and other research organizations count as part of the December-quarter tally. These include corporate giants like Oracle Corp. (ORCL - Free Report) , FedEx Corp. (FDX - Free Report) , NIKE Inc. (NKE - Free Report) and Adobe Inc. (ADBE - Free Report) .
Total earnings for these 18 index members are up 32.2% from the same period last year on 9% higher revenues, with 83.3% beating EPS estimates and 72.2% beating revenue estimates. Year over year, total earnings of the S&P 500 are likely to up 7.6% in fourth-quarter 2025 on 7.7% higher revenues.
More Rate Cut Hope
The Fed lowered the benchmark lending rate by 75 basis points in 2025 after lowering it by 1% in 2024. The current Fed fund rate is in the range of 3.50-3.75%. Market participants are hopeful for two more rate cuts of 25 basis points each in 2026. The CME FedWatch interest rate derivative tool currently shows the first rate cut as likely to happen in April with a probability of nearly 60%.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Initial Claims Decreased More Than Expected
U.S. stock futures are trading in negative territory to start the last trading day of 2025. Wall Street ended in the negative zone in the last three trading days. Financial researchers are skeptical of a Santa Rally this time.
Wall Street’s rally of U.S. stocks in 2023 and 2024 continued in 2025, albeit at a slow pace. Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — are up 13.7%, 17.3% and 21.5%, respectively.
In 2023, the Dow, the S&P 500 and the Nasdaq Composite rallied 13.7%, 23.3% and 43.4%, respectively. Similarly in 2024, the Dow, the S&P 500 and the Nasdaq Composite advanced 12.9%, 23.3% and 28.6%, respectively.
At this stage, the most important question is whether this more than three years old rally will continue in 2026. A majority of financial analysts and economists are hopeful of a 2026 rally too. The impressive bull run of the past three years had been primarily driven by the global artificial intelligence (AI) technology boom. Generative and agentic AI have transformed the entire landscape of the information technology sector worldwide.
AI Frenzy is Rock Solid
The AI saga, supported by the massive growth of cloud computing and data centers, is yet to fully unfold. This space remains rock solid, supported by an extremely bullish demand scenario. The demand for data center capacity has surged to manage and store the vast amount of cloud computing-based data.
Goldman Sachs and Bank of America projected that AI infrastructure capex spending will cross $1 trillion in 2028. JP Moran and Citigroup forecast this figure to total $5 trillion cumulative in 2030. Research firm McKinsey & Co. estimated that global AI-powered data center infrastructure capex will reach around $7 trillion by 2030.
Four of the “magnificent 7” stocks have decided to invest a massive $380 billion in 2025 as capital expenditure for AI-infrastructure development. This marks a significant 54% year-over-year increase in capital spending on the AI ecosystem. Moreover, these companies have also said that AI capex is likely to increase handsomely in 2026.
Strong Q4 Earnings Expectations
Wall Street analysts are optimistic about fourth-quarter 2025. As of today, 18 S&P 500 companies have reported quarterly financial numbers, which Zacks and other research organizations count as part of the December-quarter tally. These include corporate giants like Oracle Corp. (ORCL - Free Report) , FedEx Corp. (FDX - Free Report) , NIKE Inc. (NKE - Free Report) and Adobe Inc. (ADBE - Free Report) .
Total earnings for these 18 index members are up 32.2% from the same period last year on 9% higher revenues, with 83.3% beating EPS estimates and 72.2% beating revenue estimates. Year over year, total earnings of the S&P 500 are likely to up 7.6% in fourth-quarter 2025 on 7.7% higher revenues.
More Rate Cut Hope
The Fed lowered the benchmark lending rate by 75 basis points in 2025 after lowering it by 1% in 2024. The current Fed fund rate is in the range of 3.50-3.75%. Market participants are hopeful for two more rate cuts of 25 basis points each in 2026. The CME FedWatch interest rate derivative tool currently shows the first rate cut as likely to happen in April with a probability of nearly 60%.