Wall Street's major indices closed higher on Tuesday in a holiday-shortened session, with gains in megacap and growth stocks driving the rally. The Dow Jones Industrial Average climbed 0.91% to 43,297.03, the S&P 500 rose 1.1% to 6,040.04, and the Nasdaq Composite advanced 1.35% to 20,031.13.

The rally marked the first day of the seasonal "Santa Claus rally," with megacap stocks, including Tesla, leading gains. Tesla shares surged 7.4%, boosting the consumer discretionary sector, which rose 2.6%. All 11 S&P 500 sectors closed in positive territory.

Chipmakers also performed well, with Broadcom and Nvidia up 3.2% and 0.4%, respectively. Arm Holdings gained 3.9%, recovering from prior losses.

Despite elevated Treasury yields, optimism around long-term technology developments, such as artificial intelligence, supported growth stocks. Crypto-related stocks also climbed, with companies like Microstrategy and Riot Platforms advancing as bitcoin prices rose.

US markets closed early for Christmas Eve and will remain shut on Christmas Day.