US stock markets rallied ahead of Christmas, with the S&P 500 hitting a record high during a shortened trading session, as investors bet on possible interest rate cuts by the Federal Reserve next year, Reuters reports.

According to Reuters, the benchmark S&P 500 touched an intraday record of 6,921.42 points, surpassing its previous peak in October, while the Dow Jones Industrial Average rose 167.50 points, or 0.35 per cent, to 48,610.95. The Nasdaq Composite was largely flat, losing 2.48 points, or 0.01 per cent, to 23,558.35.

Trading volumes were thin as U.S. markets were scheduled to close early at 1 p.m. ET on Wednesday, 24 December, and remain shut on Thursday for Christmas. The gains were supported by strong performance in financial and technology stocks, with Micron Technology scaling a record high and bank stocks contributing to the broader market advance.

Reuters reports that recent market gains have fuelled hopes of a “Santa Claus rally”, a seasonal pattern where stocks rise in the last five trading days of the year and the first two days of January. The period started on Wednesday and will run through 5 January.

Investors also reacted to mixed economic data, including faster third-quarter U.S. economic growth and unexpectedly lower jobless claims, which supported optimism about a resilient economy despite seasonal volatility.

Other market movements included Nike shares climbing 4.7 per cent after Apple CEO Tim Cook purchased about $3m of stock, while Intel fell 1.6 per cent following reports that Nvidia halted tests to manufacture on Intel’s 18A chipmaking technology. Dynavax Technologies surged 38.5 per cent after French drugmaker Sanofi announced plans to acquire the company for $2.2bn.

Advancing issues outnumbered decliners by 1.69 to 1 on the NYSE and 1.33 to 1 on the Nasdaq, with the S&P 500 recording 11 new 52-week highs and two new lows, Reuters reports.