U.S. stocks pushed higher into early afternoon trading on Friday, with the Dow Jones Industrial Average (DJIA) climbing as investors returned to the AI-led rally that powered much of 2025—and as markets braced for the quarter’s biggest wave of expiring derivatives.
Around early afternoon, the Dow was trading in the 48,200–48,300 range, up roughly 0.6% on the day, with the session’s high-water mark near 48,290 and the low near 47,975. [1]
The market tone: relief—mixed with caution. Softer inflation data released Thursday has strengthened expectations that the Federal Reserve may have room to cut rates further in 2026, but traders and strategists continue to warn that a recent government shutdown may have distorted key economic readings. [2]
Dow Jones at a glance at 1:13 p.m. ET
By the early afternoon update window:
- DJIA: roughly 48,245, up about 0.6% on the day [3]
- Day’s range: about 47,975 to 48,290 [4]
- Distance from the 52-week high: about 1.3% below the 52-week peak near 48,886.86 [5]
Even after a choppy December, the Dow is attempting to end the last full trading week of 2025 on firmer footing—helped by renewed strength in mega-cap tech and semiconductor-linked names across the broader market. [6]
Why the Dow is up today: AI momentum returns (and the index is built to feel it)
Friday’s move has been powered by a familiar cocktail: AI optimism + cooling inflation hopes + year-end positioning.
A key storyline is the bounce in technology and AI-related shares after recent jitters around valuation, funding, and the massive spending required for data centers and next-generation compute infrastructure. Reuters described the rebound as regaining momentum into year-end, with chip and mega-cap strength extending from Thursday’s session. [7]
Several catalysts converged:
- Semiconductors and AI-linked stocks regained leadership, helping lift risk appetite and pushing major indexes higher. [8]
- Micron’s upbeat AI-demand outlook continued to ripple through the sector, supporting broader “AI trade” sentiment. [9]
- Oracle surged after a TikTok-related U.S. operations deal became a major headline—important less for the Dow’s mechanics and more for the market’s AI-and-cloud narrative. [10]
And because the Dow is price-weighted, single-stock moves can matter more than many investors expect. MarketWatch noted that strong gains from names like NVIDIA and Boeing were among the biggest point contributors to the Dow’s rise in morning trading—an effect amplified by the index’s methodology. [11]
The drag: Nike’s earnings stumble hits sentiment (and the Dow’s points)
Not everything was green.
Nike shares slid sharply after earnings, with reports pointing to weakness tied to China demand and margin pressure—one of the day’s largest negative influences on the Dow’s point tally. [12]
The dynamic is emblematic of late-2025 trading: even as investors buy the AI dip, they remain sensitive to signs that consumer-facing multinationals are dealing with a tougher combination of trade friction, pricing pressures, and uneven global demand. [13]
The macro engine: inflation data cools, but the “data distortion” debate is real
Markets are still digesting Thursday’s inflation report—one that came in cooler than many expected and revived rate-cut hopes. At the same time, multiple reports emphasized a major caveat: the 43-day federal shutdown delayed data collection and may have introduced distortions.
- Reuters flagged that investors drew comfort from softer inflation, while also highlighting concerns that the CPI print could be skewed by shutdown-related disruptions. [14]
- The AP similarly reported that economists warned the inflation figures could be “suspect” due to shutdown-related delays. [15]
This matters directly for the Dow because the index is heavily exposed to rate-sensitive and economically cyclical sectors (industrials, financials, healthcare and consumer bellwethers). If the market becomes more confident that inflation is easing without a sharp economic downturn, it supports the “soft landing” playbook that tends to be friendly to blue-chip stocks.
Fed outlook: traders lean toward more cuts in 2026
The rate narrative is doing a lot of work today.
Reuters reported that traders continued to price in at least two quarter-point rate cuts next year, while also assigning a meaningful probability to a cut as soon as January (even as many economists and policymakers remain cautious). [16]
Axios captured the shift in tone after the inflation data, noting growing optimism that the Fed could cut more than previously expected—an outlook some strategists argue could broaden market leadership beyond Big Tech if the economy remains resilient. [17]
The key nuance for Dow watchers: a “rate-cut rally” can be bullish or bearish depending on the why. Cuts driven by falling inflation and stable growth can support cyclicals; cuts driven by a weakening economy can push investors back into defensive positioning. Markets are still trying to decide which script 2026 will follow. [18]
“Triple witching” (and record options expiry) is the wild card into the close
Friday is also a major derivatives event—often dubbed triple witching (and sometimes discussed alongside broader “quadruple witching” dynamics), when multiple types of options and futures contracts expire simultaneously.
Axios reported that more than $7 trillion in stock options, index options, and index futures were set to expire, with Citigroup estimating $7.1 trillion of equity options rolling off. [19]
Two takeaways for Dow traders:
- Volume can spike sharply as institutions roll, hedge, or close positions. [20]
- High volume does not automatically mean high volatility—Axios noted Citi’s view that triple-witching days have often been high-volume but relatively low-volatility on average. [21]
Still, the Dow can feel these flows acutely because a handful of high-priced components can swing the index by dozens of points quickly, particularly into the closing auction when index and ETF rebalancing effects can concentrate. [22]
Global backdrop: Japan’s rate hike, higher yields, and a steady risk tone
Overseas developments mattered today too—especially Japan’s surprise-to-some shift back into tightening.
Reuters reported that the Bank of Japan raised rates to a three-decade high, pushing Japanese bond yields higher and influencing global rates and currency markets. [23]
MarketPulse argued that part of Friday’s risk appetite may reflect traders concluding that the BOJ could be less hawkish going forward than feared—supporting the global “carry trade” dynamics that often feed into equity risk-taking. [24]
For the Dow, the global link is indirect but real: higher global bond yields can pressure equity valuations, while currency swings can affect multinational earnings expectations—particularly for industrial and consumer brands with major overseas revenue.
Outlook: can the Dow still get a Santa rally?
The “Santa rally” conversation is back—though this year it comes with unusually sharp debate over the AI trade’s durability and the credibility of recent data.
Reuters’ week-ahead analysis highlighted two themes driving recent swings: scrutiny of AI spending and shifting expectations for Fed cuts in 2026. [25]
One strategist quoted by Reuters said the latest inflation data could provide a “green light” for a Santa rally, even as investors also may lock in profits after a strong year. [26]
And the historical setup is well-known: Reuters noted that since 1950, the S&P 500 has averaged gains across the final five trading days of the year and the first two of January—often cited as the Santa Claus rally window. [27]
What could help the Dow into year-end
- Continued stabilization in AI and megacap tech sentiment [28]
- Confirmation that inflation is cooling without a major growth break [29]
- A tame finish to options-expiry flows into today’s close [30]
What could derail it
- Another bout of AI spending anxiety (data centers, capex scrutiny) [31]
- Confusion from shutdown-distorted data prints [32]
- A late-day volatility flare-up tied to expiries and rebalancing [33]
What to watch next for the Dow
With today’s “witching” flows in play, traders are likely to treat the late session as a stress test for whether this rebound can hold into the holidays.
Beyond today, Reuters pointed to a slate of upcoming U.S. economic reports—including GDP, durable goods, and consumer confidence—that could help investors judge whether the economy is re-accelerating, cooling, or merely generating noisy signals after the shutdown. [34]
For Dow investors, the practical question is simple: Is the market rally broadening beyond tech in a durable way, or does every wobble still require AI leaders to rescue the tape?
Either way, as of the 1:13 p.m. ET update window, the Dow’s message is that buyers are back—cautiously—while the market heads into one of the most mechanically complex closes of the quarter. [35]
References
1. www.investing.com, 2. www.reuters.com, 3. www.investing.com, 4. www.investing.com, 5. www.investing.com, 6. www.reuters.com, 7. www.reuters.com, 8. www.reuters.com, 9. www.reuters.com, 10. www.reuters.com, 11. www.marketwatch.com, 12. www.reuters.com, 13. apnews.com, 14. www.reuters.com, 15. apnews.com, 16. www.reuters.com, 17. www.axios.com, 18. www.axios.com, 19. www.axios.com, 20. www.axios.com, 21. www.axios.com, 22. www.marketwatch.com, 23. www.reuters.com, 24. www.marketpulse.com, 25. www.reuters.com, 26. www.reuters.com, 27. www.reuters.com, 28. www.reuters.com, 29. www.reuters.com, 30. www.axios.com, 31. www.reuters.com, 32. www.reuters.com, 33. www.axios.com, 34. www.reuters.com, 35. www.investing.com
