NEW YORK: Wall Street’s main indexes advanced on Tuesday, as gains in a handful of megacap and growth stocks bolstered benchmarks in a truncated trading session before Christmas.

With megacap stocks having outsized influence on markets, their performance is often a key driver of indexes. When coupled with reduced trading volumes and few other catalysts, as many investors take time off for the holidays, this is even more pronounced.

All the so-called Magnificent Seven megacap stocks climbed on Tuesday, led by the 5.1% advance by Tesla.

The automaker’s rise helped push the Consumer Discretionary 1.9% higher. It was the top gainer among the nine S&P sectors in positive territory.

Elsewhere, chip manufacturers were also buoyant. Broadcom and Nvidia were up 3% and 1.1%, respectively, while Arm Holdings climbed 3.9%, on course to regain much of the ground lost in the previous session when it was hit by a lost court verdict.

Stock markets will shut at 1:00 p.m. ET on Tuesday and will be closed for Christmas on Wednesday.

At 11.22 a.m. Eastern time, the S&P 500 gained 41.80 points, or 0.70%, to 6,015.87 points, while the Nasdaq Composite rose 197.63 points, or 1.00%, to 19,962.51. The Dow Jones Industrial Average climbed 173.43 points, or 0.40%, to 43,080.38.

“Investors are breathing a sigh of relief that maybe the hawkish rate cut last week combined with the softer PCE reading indicate that inflation is not that big of a re-emerging threat,” said Sam Stovall, chief investment strategist of CFRA Research.

“As a result, maybe this market will end up creeping higher between now and the end of the year.” After a stellar run to record highs following the November election, which sparked hopes of pro-business policies under US President-elect Donald Trump, Wall Street’s rally hit a bump this month as investors grappled with the prospect of higher interest rates in 2025.

The US Federal Reserve eased borrowing costs for the third time this year last Wednesday, but signaled only two more 25-basis-point reductions next year, down from its September projection of four cuts, as policymakers weigh the possibility of Trump’s policies stoking inflation.

Traders expect the Fed to leave rates in the range of 4% to 4.25% by the end of 2025, from between 3.75% and 4% about 10 days ago, according to CME’s FedWatch tool.

Markets are currently in a historically strong period called the “Santa Claus rally”. The S&P 500 on average has gained 1.3% in the last five days of December and first two days of January, according to data from the Stock Trader’s Almanac going back to 1969.