Stocks jumped Tuesday on Christmas Eve as the market pulled off back-to-back gains in the holiday week.

The S&P 500 added 1.1% to 6,040.04, and the Dow Jones Industrial Average gained 390.08 points, or 0.91%, to 43,297.03. The Nasdaq Composite climbed 1.35% to 20,031.13, helped by a 7.4% jump in Tesla shares. Amazon and Meta Platforms gained more than 1% each.

The New York Stock Exchange closed early at 1 p.m. ET for Christmas Eve, while the bond market closes at 2 p.m. The market is also shut on Wednesday for Christmas Day.

Tuesday marked the start of the seasonal Santa Claus rally, which happens in the last five trading days of the year and the first two in January. Since 1950, the S&P 500 has generated an average return of 1.3% during this period, widely outpacing the market's average seven-day return of 0.3%, according to LPL Research.

"There's a lot of good to think about, but I think at the same time, you want to be restrained in your enthusiasm here because the market has rallied," Paul Hickey, Bespoke Investment Group co-founder, said on CNBC's "Squawk Box."

With two straight winning days, the S&P 500 is up 1.8% this week, while the Dow has gained about 1%. The strong rally in megacap tech lifted the Nasdaq up 2.3% week to date.

The S&P 500 also turned green for the month with a 0.1% gain after this week's advance. The tech-heavy Nasdaq has rallied 4.2% in December, with Google parent Alphabet up 16%, Apple up nearly 9% and Tesla rallying about 34% month to date. The blue-chip Dow, however, is still down about 3.6% in December, on pace for its worst monthly performance since April.

American Airlines shares fluctuated Tuesday after the carrier briefly grounded all flights in the U.S. due to a technical issue on one of the busiest travel days of the year. The stock ended the session up 0.6%.

Jefferies says empty store shelves are a good sign for toy sales

'Twas the day before Christmas, and Jefferies analysts said they were "incrementally bullish" on toy sales this holiday season. Their store checks showed well-trafficked aisles and lower inventory compared with the beginning of the season.

"We noticed that board games were selling particularly well in-store and online, based on our checks," the analyst wrote. "Discounts were also sequentially lower from peak Black Friday levels."

Notably, the Walmart and Target stores Jefferies visited allocated more space to toys since Cyber Monday.

It has been a trying time for toy stocks. Mattel shares are down more than 5% year to date, while Hasbro shares have risen more than 11% during the same period. However, Hasbro has been falling more rapidly in recent weeks. Month to date, Hasbro's stock is down nearly 13%, while Mattel shares have declined 6%.

— Christina Cheddar Berk

American Airlines, big banks among Tuesday's biggest midday movers

These are the stocks making the biggest moves during midday trading:

• American Airlines — Shares slipped less than 1%, recovering from earlier losses, after the airline temporarily grounded all of its flights due to a technical issue.
• Broadcom — The semi stock added 2%, extending its December rally. Shares have surged more than 46% this month, propelling its 2024 gain above 112%.
• Big banks — Shares of some big bank stocks rose more than 1% amid news that a group of banks and business groups are suing the Federal Reserve over the annual stress tests, saying it "produces vacillating and unexplained requirements and restrictions on bank capital."

Read the full list of stocks on the move here.

— Samantha Subin

Palantir hits all-time high as epic 2024 rally continues

Palantir touched new highs on Tuesday, the latest milestone amid the stock's eye-popping run.

Shares rose more than 4%, marking a new intraday record at session highs. That propelled the software stock, which is on track to notch the biggest gain within the S&P 500 this year, above 390% higher compared with the start of 2024.

Palantir's monster run has surprised Wall Street. Shares are currently trading at levels that are nearly double the average price target of analysts polled by LSEG.

— Alex Harring, Adrian van Hauwermeiren

First Solar among some of the really cheap stocks heading into 2025

Looking ahead to 2025, investors may find opportunity with some companies such as First Solar that have traded at significant discounts on a forward price-to-earnings ratio basis in recent history, according to Trivariate Research.

The research firm included the solar stock, which has underperformed the broader market this year by posting year-to-date gains of around 8%, in its list of stocks whose forward P/E ratios have dropped below 10 times earnings for the first time over the past five years.

While First Solar has notably struggled since President-elect Trump's victory due to fears that his second term could threaten the Inflation Reduction Act — legislation that includes tax credits for renewable energy — analysts think the name could still be a winner, even with policy changes under the incoming administration.

Sirius XM, which Warren Buffet's Berkshire Hathaway recently purchased more shares of, is another name that made the list. That stock has drastically underperformed the broader market in 2024, sliding nearly 58% year to date.

CNBC Pro subscribers can read more here.

— Sean Conlon

10-year Treasury yield hits highest level since May

Treasury yields continued to rise this week, following a big jump last week triggered by the Federal Reserve's updated rate-cut outlook for 2025.

The 10-year yield climbed another 3 basis points to 4.613%, hitting its highest level since May 30. The 30-year yield rose to 4.808% on Tuesday to reach its highest level since April 26.

— Yun Li

American Airlines ground stop lifted

American Airlines recovered in Tuesday's premarket after a ground stop affecting flights was canceled. Shares were last down 0.7%.

— Alex Harring

American Airlines shares fall as technical issue affects flights

American Airlines shares slid more than 3% in premarket trading after the company said Tuesday morning that an unspecified technical issue has affected all flights.

American Airlines has asked for a nationwide ground stop, according to the Federal Aviation Administration. This comes amid the busy holiday travel season.

— Alex Harring

Honda keeps rising in premarket trading

U.S.-listed shares of Honda Motor added more than 2% in Tuesday's premarket trading, building on its recent rally.

Honda has popped after announcing official talks to merge with Nissan. The automaker's U.S.-listed shares have climbed more than 12% since the current trading week began.

— Alex Harring

Big retail ETF limps into the holiday season

It has been a rocky December for the SPDR S&P Retail ETF (XRT), which is off more than 3% this month alone.

Notable losers in the exchange-traded fund during the period include Signet Jewelers, down 19%, and Foot Locker, which is off more than 14% in December. Clothing company Guess is also off 13% this month.

Not all constituents in the retail ETF are on pace for a losing month, however. The top performer of the bunch is Ollie's Bargain Outlet, up nearly 19% in December. Academy Sports and Outdoors and Five Below are each up 16% this month.

— Jason Gewirtz, Darla Mercado

Investors are 'too pessimistic about inflation,' Jay Hatfield says

The inflationary pressures that could likely come as a result of President-elect Donald Trump's tariff plans may not be all that impactful, according to Infrastructure Capital Advisors' Jay Hatfield.

The firm's CEO thinks investors may be missing the deflationary element present in the dollar's gains. His remarks come as the dollar index, which inched higher on Monday, has risen more than 6% year to date.

"In general, investors are too optimistic about growth and too pessimistic about inflation," Hatfield said in an interview with CNBC. "It's kind of irrational for investors to fear inflation from tariffs, but yet the dollar has already wiped out all of the potential — or most of the potential — increase in prices."

Late last month, Trump vowed to raise tariffs by an additional 10% on goods from China, as well as a 25% duty on goods from Mexico and Canada.

During his campaign for president, Trump threatened imposing a tariff of 60% on Chinese goods.

"If the Trump administration raises tariffs 10%, but the dollar is appreciated 10%, that shouldn't have any significant impact," Hatfield continued.

— Sean Conlon

Stock futures open little changed

U.S. stock futures opened relatively unchanged Monday evening.

S&P 500 futures, as well as Nasdaq 100 futures, traded just above the flatline. Futures tied to the Dow Jones Industrial Average gained 31 points, or about 0.1%.

— Sean Conlon