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Wall Street rally pauses near records in Christmas Eve trade

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The S&P 500 ended little changed in a shortened, pre-Christmas session on Tuesday, as investors paused after a record-setting rally fuelled by improving U.S.-China trade relations that has put the market on course for its best year since 2013.

The Dow Jones Industrial Average fell 36.08 points, or 0.13 per cent, to 28,515.45, the S&P 500 lost 0.67 points, or 0.02 per cent, to 3,223.34 and the Nasdaq Composite added 7.24 points, or 0.08 per cent, to 8,952.88.

All three major stock indexes closed at all-time highs on Monday, continuing a record-setting spree. President Donald Trump further fanned hopes of a trade truce over the weekend by saying the two sides would sign a Phase 1 deal “very shortly.”

Investors were wary at the beginning of the month about the stock market mirroring a slump from December 2018, when trade tensions between the world’s top two economies escalated, marking the worst December on Wall Street since the Great Depression.

But the much-awaited breakthrough in negotiations, coupled with indications of a smoother exit for Britain from the European Union, has sent financial markets across the world into record territory this month.

“This holiday period should be rather calm as trade updates appear very constructive as we near the finalization of the Phase 1 trade deal next month,” Edward Moya, senior market analyst at OANDA, wrote in a note.

The S&P 500 is up nearly 29 per cent so far in 2019 and set for its best year since 2013, also powered by three interest rate cuts by the Federal Reserve and easing fears of a recession.

Volumes are expected to be thin this week as traders settle in for the holidays, with the main U.S. stock exchanges to close at 1 p.m. ET on Tuesday and remain shut on Christmas Day.

TSX hits record close ahead holiday

Canada’s main stock index showed some pre-Christmas spirit, with a modest gain and a record close ahead of the two-day holiday.

The Toronto Stock Exchange’s S&P/TSX composite index closed up 51.44 points at 17,180.15 at 1 p.m ET.

The Canadian dollar traded at an average of 76.01 cents US, up compared with 75.99 cents on Tuesday.

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