Another rally in big technology shares helped equities close mostly higher Monday with animal spirits flowing on Wall Street headed into year end. The Dow declined 0.3 percent while the S&P 500 rose 0.4 percent and the Nasdaq was up 1.2 percent to a new record high. US Treasury yields rose while the dollar and oil prices slipped.

Growth stocks outperformed value paced by big gains in chipmakers and AI shares. Megacaps including Alphabet, Apple, Amazon, Broadcom and Tesla all set record highs.

In economic data Monday, the Empire manufacturing index and the S&P PMI manufacturing index both missed on the downside. The services PMI came in better than expected. Investors are confident the Federal Reserve will announce a 25 basis point rate cut on Wednesday but expectations are rising that the Fed will scale back rate cut expectations for 2025 in response to economic strength and sticky inflation.

Health care stocks had a bad day after President-elect Trump's threat to reduce drug prices by getting rid of the middle man, an apparent reference to pharmacy benefit managers. CVS and United Health sold off in response, along with other insurers.

Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.

Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.