The S&P 500 is poised for a fourth consecutive day of gains, driven by a surge in AI-related equities. Leading the charge are AI chip giants and CNBC Investing Club holdings, Nvidia and Broadcom, both seeing significant upward movement in afternoon trading. This rally comes despite a recent dimming of expectations for a Federal Reserve interest rate cut in January, following the release of robust economic data. The initial third-quarter Gross Domestic Product report indicated a 4.3% expansion in the U.S. economy, surpassing the 3.2% forecast from Dow Jones economists.
**China Trade Policy Shift: A Semiconductor Truce?**
In a notable development, the Trump administration has announced a delay in implementing additional tariffs on Chinese semiconductor imports, pushing the decision back by at least 18 months. This move, detailed in a Federal Register filing, follows a trade investigation initiated under the previous administration. The investigation concluded that China has engaged in “increasingly aggressive and sweeping non-market policies and practices” to dominate the semiconductor industry, to the detriment of U.S. companies and workers.
Despite these findings, the administration has set an initial tariff rate of 0% on Chinese-made silicon, effective until at least June 23, 2027. This measured approach is seen as a positive development for the broader economy and the stock market as we navigate into 2026, potentially easing U.S.-China trade tensions. While the focus is on Chinese chips entering the U.S., the underlying message from the White House’s posture offers encouragement to investors. Furthermore, this could lead to reduced input costs for U.S. companies across sectors like defense, medical devices, and automotive that rely on Chinese-sourced components.
**Meta Platforms: A “Buy the Dip” Opportunity?**
Baird analysts are signaling that current weakness in Meta Platforms’ stock presents a compelling opportunity for investors. After reaching a record high of $790 per share on August 12th, Meta’s stock experienced a decline, exacerbated by its third-quarter earnings report, which fueled investor concerns over its substantial AI investment spending. Although the stock has since recovered from its late October lows, it remains over 11% below its pre-earnings peak. Year-to-date, Meta’s performance of approximately 13.5% trails the S&P 500’s more than 17% advance.
In a recent note, Baird analysts advised clients to be “opportunistic buyers” on the dip, suggesting that while near-term sentiment risks persist, market expectations appear more balanced compared to earlier in the year. Key catalysts highlighted include improved execution in Meta AI and the continued development of Llama, the company’s suite of large language models. Baird anticipates that while mixed sentiment might linger into early 2026 due to margin uncertainties, the narrative could shift more positively through the year. Potential drivers include a “margin-clearing event,” the launch of the next Llama model, updates to Meta AI, and the ramping up of monetization efforts for WhatsApp and Threads.
Despite these optimistic projections, Baird analysts have slightly adjusted their price target for Meta to $815 from $820 per share. Nevertheless, this revised target still represents an attractive 23% upside from Monday’s closing price and would mark a new all-time high. Similar to Baird, we maintain a positive outlook on Meta’s AI initiatives. This conviction led us to increase our holdings in Meta shares last month, marking our first purchase in three years during its recent pullback. Meta has been actively recruiting top AI talent, bolstering its TBD Labs, which is responsible for its large language models, with world-class engineers. Reports also suggest Meta is considering cuts to its metaverse division, which could free up capital to be reinvested into high-growth areas like generative AI. Our price target for Meta stands at $825.
**Looking Ahead: Economic Data and Holiday Trading**
The upcoming week holds limited major earnings reports. On the economic data front, investors will be closely watching initial jobless claims, scheduled for release on Wednesday at 8:30 a.m. ET. The New York Stock Exchange will operate on a shortened schedule on Christmas Eve, closing at 1 p.m. ET, and will remain closed on Christmas Day.
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