US stocks closed lower on Monday, with profit-taking weighing on AI-related shares. Investors continued positioning for a strong finish to what has been a solid year for equities, while markets remained in the traditionally strong year-end “Santa Claus rally” window.
From a broader perspective, 2025 has been a strong year for Wall Street. The S&P 500 is up nearly 18% year-to-date, while the Dow Jones Industrial Average has gained around 14.5%, on track for its best annual performance since 2021. The Nasdaq Composite has outperformed, rising more than 22% so far this year.
Markets are currently within the so-called Santa Claus rally period, a historically bullish stretch covering the last five trading days of the year and the first two trading days of the new year. According to the Stock Trader’s Almanac, the S&P 500 has averaged gains of more than 1% during this window since 1950.
Looking ahead, the economic calendar remains relatively light, but investors will gain further insight into the Federal Reserve’s outlook for 2026. The minutes from the Fed’s December policy meeting are scheduled for release on Wednesday at 2:00 p.m. ET.
While Fed Chair Jerome Powell and other policymakers typically avoid direct commentary on equity markets, Powell recently acknowledged elevated stock valuations when responding to questions about financial conditions. He noted that the Federal Open Market Committee closely monitors overall financial conditions to assess whether policy is influencing markets as intended, adding that equity prices appear elevated by several valuation measures.
US Stocks
By market capitalization, Nvidia fell 1.21%, Apple rose 0.13%, Alphabet Class A gained 0.02%, Microsoft slipped 0.13%, Amazon declined 0.19%, Meta dropped 0.69%, Broadcom fell 0.78%, and Taiwan Semiconductor lost 0.63%. Tesla underperformed, sliding 3.27%, while Berkshire Hathaway Class A rose 0.67%. Eli Lilly added 0.09%, Walmart gained 0.71%, and JPMorgan Chase fell 1.27%.
Chinese ADRs traded lower overall, with the Nasdaq Golden Dragon China Index closing down 0.67%. Alibaba dropped 2.46%, JD.com slipped 0.44%, Pinduoduo fell 0.75%, Bilibili lost 1.24%, and XPeng declined 1.35%. Baidu rose 1.61%, NIO surged 4.71%, NetEase gained 0.92%, Futu Holdings added 0.51%, while Li Auto fell 1.61% and EHang dropped 2.37%.
Market Snapshot:
- Dow Jones fell 249.04 points, or 0.51%, to 48,461.93
- Nasdaq declined 118.75 points, or 0.50%, to 23,474.35
- S&P 500 slipped 24.20 points, or 0.35%, to 6,905.74
Hong Kong Stocks
Hong Kong’s major indices moved higher, with tech stocks leading gains by midday. Baidu surged more than 6%, while NetEase and JD.com rose over 1%. Semiconductor stocks also performed strongly, with Innoscience climbing more than 9%. Oil stocks outperformed, led by CNOOC, which gained over 4%.
The semiconductor sector remained in focus as Galaxy Securities highlighted December’s rally driven by price increases across the supply chain, sustained AI demand, and strengthening domestic substitution trends. Supply chain security and technological self-reliance remain long-term structural themes, particularly for upstream equipment and materials.
Oil stocks gained after reports showed strong production growth from offshore gas fields around Hainan Island. China National Offshore Oil Company announced cumulative oil and gas production exceeding 10 million tonnes of oil equivalent in 2025, marking the fifth consecutive year of output growth and a record high.
Market Snapshot:
- Hang Seng Index rose 0.44% to 25,749.19
- Hang Seng Tech Index gained 1.04% to 5,540.17
- China Enterprises Index advanced 0.67% to 8,950.95
A50
Mainland China’s equity markets were mixed in early trading. The Shanghai Composite edged down slightly, while the Shenzhen Component posted modest gains. The ChiNext Index slipped marginally, and the Beijing Stock Exchange 50 Index underperformed. Total turnover across Shanghai, Shenzhen, and Beijing markets reached CNY 1.30 trillion, lower than the previous session, with more than 2,700 stocks declining.
Sector-wise, gaming, film and television, AI applications, construction machinery, cross-border payments, humanoid robotics, pork producers, and semiconductors outperformed. Meanwhile, Hainan Free Trade Port, wind power equipment, insurance, photovoltaic equipment, and airport transport stocks lagged.
Market Snapshot:
- Shanghai Composite fell 0.10% to 3,961.21
- Shenzhen Component rose 0.23% to 13,568.09
- ChiNext Index slipped 0.06% to 3,220.56
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