The Nasdaq is heading into Christmas week with a familiar late-December cocktail: holiday-thin liquidity, a “Santa Claus rally” watch, and the kind of tech-led price action that can look calm in the headline… right up until it isn’t.
By the last close before the weekend, the Nasdaq Composite finished at 23,307.62, up 1.31% on Friday as large-cap tech rebounded, capping a week that still managed a gain despite early turbulence. [1] That rebound matters because it re-centers attention on two things Nasdaq traders obsess over in late December: seasonality and rates.
This year, both themes come with plot twists—starting with fresh Federal Reserve signals about staying patient on cuts, a major Nasdaq-100 reshuffle that takes effect Monday, and Nasdaq’s own push to stretch stock trading toward a near round-the-clock model.
Nasdaq’s latest move: Tech rebound lifts the Composite, but volatility has been loud underneath
Friday’s close didn’t arrive quietly. The session took place on “triple witching”—the quarterly expiration of stock options, index options, and index futures—an event that often amplifies swings and volume. Reuters reported 24.60 billion shares traded across U.S. exchanges that day versus a 20-day average of 17.19 billion. [2]
The headline driver was a renewed bid for mega-cap tech and AI-linked names after Micron’s upbeat outlook earlier in the week reignited optimism. [3] In the background: investors are still debating whether the market is pricing AI like a durable productivity boom… or like a capital-spending fever dream.
That debate is exactly why Nasdaq often moves more than the broader market: the index is structurally heavier in growth stocks where long-term expectations (and discount rates) matter more.
Santa Claus rally watch: Seasonality says “up,” but the setup says “handle with care”
The “Santa Claus rally” isn’t a myth so much as a statistical tendency: Reuters cited Stock Trader’s Almanac data showing that since 1950, the S&P 500 has risen an average of 1.3% over the last five trading days of the year and the first two trading days of January. [4]
But in 2025, the mechanics of a Santa rally look different:
- Volume is likely to be thin (holiday week + fewer catalysts), which can make Nasdaq price action choppier than usual.
- Tech leadership has been volatile, with sharp rotations in and out of AI-sensitive names.
- Macro data has been distorted by the government shutdown, complicating the inflation and growth read-through.
Charles Schwab’s weekly trading outlook summed up the mood well: a late-week recovery helped, but the author still expects light volume and the potential for higher volatility, offering only a “slightly bullish” bias into the shortened week. [5]
Week-ahead calendar: A holiday-shortened week with unusually important data
U.S. markets are set for a compressed schedule:
- Stock markets close early Wednesday, Dec. 24, and remain closed Thursday, Dec. 25 for Christmas. [6]
- Major U.S. exchanges—including Nasdaq—said they will still be open as scheduled on Dec. 24 and Dec. 26, despite a federal government closure order covering those days; the exchanges plan an early close on Dec. 24 and a regular session on Dec. 26. [7]
Even with fewer trading days, the week carries heavyweight macro releases—some of them delayed:
- Initial Q3 GDP report is expected Tuesday, a release delayed by the shutdown and set to be one of only two estimates. [8]
- Additional postponed reports include durable goods orders and industrial production/capacity utilization. [9]
- Consumer confidence is also expected Tuesday. [10]
- Traders will watch jobless claims Wednesday as a final labor-market check before the holiday. [11]
- Seeking Alpha also flags the core PCE price index (the Fed’s preferred inflation gauge) in the mix as part of the week’s data focus. [12]
Why this matters for Nasdaq: when the calendar is thin, a single macro surprise can dominate. And for growth-heavy indexes, the path of inflation and interest rates often matters more than the “level” of growth.
The Fed wildcard: A prominent signal favors holding rates steady into spring
On Sunday (Dec. 21), Reuters reported that Cleveland Fed President Beth Hammack signaled she sees no need to change interest rates for months, with a preference for keeping rates steady until at least spring 2026 unless inflation cools more clearly or the job market deteriorates materially. [13]
That message lands at an awkward moment for Nasdaq bulls, because:
- Growth stocks are most sensitive to the idea that policy will keep easing.
- Parts of the market are already trading as though rate cuts are a “when,” not an “if.”
- Recent inflation data has come with caveats: Reuters noted CPI data complications after the shutdown disrupted normal collection and reporting. [14]
The practical takeaway: the bar for a “straight-line” rally in Nasdaq is higher when credible Fed voices argue for patience. You can still get a year-end drift higher on positioning and seasonality—but the index becomes more vulnerable to sharp pullbacks when rate expectations get reset.
Nasdaq-100 reshuffle: Six adds, six removals take effect Monday, Dec. 22
One of the most concrete Nasdaq-specific catalysts this week is mechanical: the Nasdaq-100 annual reconstitution becomes effective before the market opens Monday, Dec. 22, 2025, according to Nasdaq’s official release. [15]
Added to the Nasdaq-100
- Alnylam Pharmaceuticals (ALNY)
- Ferrovial (FER)
- Insmed (INSM)
- Monolithic Power Systems (MPWR)
- Seagate Technology (STX)
- Western Digital (WDC) [16]
Removed from the Nasdaq-100
- Biogen (BIIB)
- CDW (CDW)
- GlobalFoundries (GFS)
- Lululemon (LULU)
- ON Semiconductor (ON)
- The Trade Desk (TTD) [17]
Nasdaq also emphasized the scale of the ecosystem tied to these changes: the Nasdaq-100 underpins 200+ tracking products with over $600 billion in assets under management globally, including Invesco QQQ (QQQ). [18]
For traders and funds, this kind of reshuffle can create short-term pressure (and opportunity) because passive products tracking the index must adjust holdings around the effective date. For long-term investors, it’s also a signal of the index’s evolving composition—more biotech and infrastructure exposure this time, alongside legacy tech.
A notable headline within the reshuffle: Ferrovial becomes the first IBEX 35 company included in the Nasdaq-100, effective Dec. 22. [19]
Nasdaq’s big structural bet: 23-hour weekday trading moves from concept to formal proposal
The most “Nasdaq-the-exchange” story in the current news cycle isn’t about the index at all—it’s about the market itself.
Nasdaq has submitted a proposed rule change to allow the exchange to trade equities and exchange-traded products 23 hours per day, five days per week (“23/5”), according to its filing SR‑NASDAQ‑2025‑106. [20]
Key details from Nasdaq’s proposal:
- A Day Session running 4:00 a.m. to 8:00 p.m. ET, preserving the familiar open/close structure. [21]
- A Night Session running 9:00 p.m. to 4:00 a.m. ET the next calendar day. [22]
- A one-hour pause (8:00–9:00 p.m. ET) for maintenance, testing, and processing corporate actions such as splits and dividends. [23]
- The trading week would begin Sunday night at 9:00 p.m. ET (with the Night Session) and run through Friday’s Day Session. [24]
Reuters framed this as part of a broader Wall Street push toward near-continuous trading, with other venues also pursuing extended-hour models. [25]
Why it matters for Nasdaq investors (and Nasdaq the stock, NDAQ): if approved and implemented, extended trading hours could reshape where liquidity forms, how price discovery happens overnight, and how market makers and brokers staff risk. It also raises real concerns—thin liquidity and wider spreads in overnight sessions are not theoretical problems; they’re common in today’s after-hours market.
IPO pipeline outlook: Nasdaq expects more billion-dollar debuts in 2026
Nasdaq is also leaning into a more upbeat capital-markets narrative heading into 2026.
Reuters reported that Nasdaq expects a bigger year for listings, pointing to a pipeline of billion-dollar-plus IPOs. For the year through Dec. 18, 2025, Nasdaq listings raised about $46.65 billion, more than double the same period a year earlier, and Nasdaq benefited from 22 transfers from the NYSE with a combined market value of about $1.2 trillion. [26]
Reuters also noted that U.S. IPOs raised $74.7 billion in 2025, up about 80% from 2024. [27]
Potential headline candidates cited as future IPO possibilities include SpaceX, OpenAI, and mortgage giants Fannie Mae and Freddie Mac. [28]
The macro logic is straightforward: lower rates + high valuations + returning risk appetite usually equals a friendlier IPO window. The Nasdaq-specific twist is that a stronger IPO market tends to reinforce Nasdaq’s identity as the home for growth and tech-forward companies—which can feed back into Nasdaq index narratives.
2026 forecasts: Wall Street still sees upside—just not a straight line
Even after a year of sharp rotations, many strategists continue to expect U.S. equities to rise in 2026, largely on the thesis that AI-related investment and productivity remain supportive.
Reuters summarized a range of major 2026 S&P 500 targets—from 7,100 (Bank of America) to 7,700 (Citi) to 8,100 (Oppenheimer). [29]
While those are S&P targets, they matter for Nasdaq because the assumptions behind them—earnings growth, rates, and AI investment—tend to magnify in Nasdaq-heavy segments. If the market environment is “risk-on,” Nasdaq typically benefits more; if rates re-price higher or AI confidence cracks, Nasdaq often absorbs more of the impact.
Bottom line for Dec. 21: Nasdaq enters Christmas week with three forces pulling at once
As of Dec. 21, 2025, the Nasdaq setup is defined by a three-way tension:
- Momentum and seasonality: a tech rebound and the Santa rally window are back in focus. [30]
- Macro uncertainty: shutdown-distorted data and fresh Fed caution could keep rate expectations from getting too euphoric. [31]
- Nasdaq-specific catalysts: the Nasdaq-100 reshuffle hits Monday, and Nasdaq’s 23/5 trading proposal is now formally on file—two stories that could influence flows and sentiment beyond a single session. [32]
For readers tracking “NASDAQ” this week—whether you mean the exchange, the Nasdaq Composite, or the Nasdaq-100—the story isn’t just whether the index drifts higher into year-end. It’s whether the market can keep paying growth-stock multiples in a world where the Fed may be less eager to keep cutting, and where Nasdaq itself is trying to reshape how (and when) U.S. stocks trade.
References
1. www.reuters.com, 2. www.reuters.com, 3. www.reuters.com, 4. www.reuters.com, 5. www.schwab.com, 6. www.investopedia.com, 7. www.reuters.com, 8. www.investopedia.com, 9. www.investopedia.com, 10. www.investopedia.com, 11. www.investopedia.com, 12. seekingalpha.com, 13. www.reuters.com, 14. www.reuters.com, 15. www.nasdaq.com, 16. www.nasdaq.com, 17. www.nasdaq.com, 18. www.nasdaq.com, 19. www.reuters.com, 20. listingcenter.nasdaq.com, 21. listingcenter.nasdaq.com, 22. listingcenter.nasdaq.com, 23. listingcenter.nasdaq.com, 24. listingcenter.nasdaq.com, 25. www.reuters.com, 26. www.reuters.com, 27. www.reuters.com, 28. www.reuters.com, 29. apnews.com, 30. www.reuters.com, 31. www.reuters.com, 32. www.nasdaq.com
