Nasdaq Today (Dec. 20, 2025): AI-Led Rebound Lifts the Nasdaq Composite as Santa Rally Hopes, Fed Uncertainty, and 24/5 Trading Plans Collide
December 20, 2025 - The Nasdaq closed Friday at 23,307.62, up 1.31% on the day and roughly 0.5% for the week. The bid returned to semiconductors and megacaps after upbeat signals from Micron and strength across chip names, with Nvidia in the mix. The tone: risk-on, but selective.
Year-to-date, the Nasdaq is up about 20.7%, topping the S&P 500 as AI-linked leaders continue to set the pace. The debate isn't settled: investors are still weighing rich multiples against the cash needs of an AI buildout that looks more marathon than sprint.
What moved the Nasdaq
Friday's rally leaned into semiconductors, lifting the broader index and resetting near-term sentiment. The Philadelphia Semiconductor Index gained as chip stocks climbed, which tends to ripple across AI enablers and adjacent tech.
The move helps, but it doesn't cancel the questions: is AI priced for perfection, and how much patience will investors have if spending outpaces near-term returns?
AI jitters paused, not gone
Two forces have steered recent volatility: scrutiny of massive AI infrastructure spending and shifting expectations for 2026 Fed cuts. Those pressures didn't disappear on Friday-they were just outweighed by price action.
AI capex is now visible in data-center deals, financing structures, and real constraints like power availability, land, chips, and permitting. The Nasdaq feels this directly because its leaders are funding, building, or supplying the stack.
Fed path: rate-cut hopes vs. policy caution
Tech-heavy indexes react hard to interest-rate expectations because future earnings carry more duration risk. Markets want a friendlier 2026; policymakers are signaling patience.
New York Fed President John Williams indicated no rush after the most recent cut and highlighted possible distortions in recent inflation data, including effects after the 43-day government shutdown. Traders still price multiple cuts next year, which keeps rate sensitivity-and Nasdaq volatility-elevated.
Downside macro risk is also on the table: stagflation would complicate cuts and hit growth multiples. Several large asset managers argue 2026 will require a baton pass from multiple expansion to real earnings growth-tougher for richly valued names.
Santa rally setup
The classic "Santa Claus rally" window covers the last five trading days of the year and the first two of January. Seasonality can be a tailwind, but liquidity typically thins into holidays.
For the Nasdaq, that means bigger swings when theme baskets (AI, semis) get flow. Expect sharper moves on less news. If you track seasonality, see the background on the pattern at Reuters Markets.
AI buildout: record data-center deals, louder bubble talk
Data-center dealmaking touched record levels in 2025, validating demand for compute, storage, and connectivity. That also intensifies the core risk debate: will the spending curve convert to profits fast enough?
Bridgewater's Greg Jensen warned the AI spend may be entering a riskier phase as Big Tech taps external capital, raising bubble dynamics if returns lag. Australia's largest pension fund signaled plans to trim global equities in 2026 on valuation and concentration concerns-meaning big AI winners may face more selective flows.
On the other side, Citi expects AI to remain a driver but sees leadership shifting from "enablers" to adopters. Translation: more dispersion across the Nasdaq, fewer straight-line moves.
Benchmarks right now
As of Friday, Dec. 19 close: Nasdaq Composite (COMP): 23,307.62. Nasdaq-100 (NDX): 25,346.18.
These marks set the stage for year-end flows, options positioning, and the "strong vs. stretched" narrative into January.
Nasdaq exchange headlines: 23/5 trading and a brighter IPO pipeline
23-hour trading plans: Nasdaq is seeking to extend trading to 23 hours a day, five days a week, with a day session from roughly 4:00 a.m.-8:00 p.m. ET, a one-hour pause, then a night session 9:00 p.m.-4:00 a.m. ET. The goal is to meet global demand for U.S. equities during local hours.
Banks are split, citing investor protections, staffing costs, and thin-liquidity volatility. Some market operators argue near round-the-clock trading is becoming mainstream as settlement speeds improve, while critics warn of distorted pricing during quiet hours.
IPO and listings outlook: Nasdaq sees a strong 2026 pipeline for billion-dollar-plus deals after a notable 2025 recovery in U.S. IPOs. Year-end stats included $46.65B raised from new listings, 22 corporate transfers totaling about $1.2T in market value (including Walmart), and an expanded Texas footprint via "Nasdaq Texas."
Biotech filings add to the thaw: Medtronic's MiniMed unit and Aktis Oncology moved to list, hinting at rebuilding breadth for growth issuers.
Index shake-ups to watch
Nasdaq-100 reconstitution (effective before market open, Mon., Dec. 22, 2025)
- Added: Alnylam, Ferrovial, Insmed, Monolithic Power Systems, Seagate, Western Digital
- Removed: Biogen, CDW, GlobalFoundries, Lululemon, ON Semiconductor, The Trade Desk
Given the ETF, futures, and options tied to the index, expect mechanical flows around these changes that can overwhelm fundamentals for a few sessions.
Crypto-heavy treasury firms under review: MSCI is considering excluding companies whose digital-asset holdings exceed 50% of total assets. Other providers, including Nasdaq and Russell indexes, could follow. That keeps firms like Strategy (formerly MicroStrategy) in the crosshairs of index eligibility debates.
Next week: data and hours
Data: GDP, durable goods, and consumer confidence are on deck-important context after shutdown-related data distortions and shifting rate expectations.
Holiday schedule: U.S. equity markets plan an early close on Dec. 24, full closure on Dec. 25, and a normal open on Dec. 26. For a quick reference, see market holiday hours.
Tactical playbook for general finance pros
- AI exposure: Split positions between "enablers" (chips, infrastructure) and "adopters" (software and industry users). Expect wider dispersion-position size accordingly.
- Rates sensitivity: Pair growth with quality cash-flow names or rate hedges. If cut odds fade, duration-heavy tech can give back gains fast.
- Seasonality and liquidity: Into year-end, reduce order size and widen limits. Thin books can turn small headlines into big moves.
- Index changes: If trading the Nasdaq-100, watch add/remove names for forced flows and short-term mispricings.
- 23/5 trading: Overnight sessions can bring gaps. Use alerts, standing stops, and defined risk if you operate outside core hours.
- Capital markets tone: A healthier IPO tape often signals improving breadth. Track deals to find early-cycle winners before they migrate into big indices.
Bottom line
The Nasdaq regained momentum, but the core questions remain. Can AI spending convert to durable earnings fast enough? Will the Fed be able to cut meaningfully in 2026, or will stickier inflation keep policy tighter than markets expect?
Seasonality may help, yet thin liquidity can exaggerate moves. And the structure of the market is shifting-near-24-hour trading and a warmer IPO pipeline will reshape how risk gets priced in 2026.
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