Santa rally on hold? Wall Street faces crosscurrents from AI and Fed uncertainty
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Investors searching for the customary year-end lift in U.S. equities are finding conditions more unsettled than festive. While major stock indices remain on course for a strong full-year performance in 2025, December has so far defied seasonal norms, with the S&P 500 edging lower despite its historical tendency to rise during the month. Market volatility in recent weeks has been driven largely by two intersecting themes: growing scrutiny of the enormous capital spending tied to artificial intelligence infrastructure, and shifting expectations around the Federal Reserve’s future interest-rate path. Concerns surrounding the pace and payoff of data-center investments, including questions around large projects, have weighed on technology and AI-linked stocks. At the same time, softer inflation readings provided temporary relief, offering a counterbalance to broader market caution. Although some investors may look to book profits after a s...