Dow and S&P 500 close higher on first day of 2026, still no Santa Claus rally

The Dow finished higher on Friday, kicking off 2026 by ending a four-day losing streak, supported by advances in chip stocks like Nvidia and Intel, as well as Boeing. Throughout 2025, the Dow, S&P 500, and Nasdaq each recorded double-digit percentage gains.
Reuters:
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Chip stocks provided a boost on Friday, with the Philadelphia SE Semiconductor index up 4%. Industrials and utilities also gained. Caterpillar and Boeing rose 4.5% and 4.9%, boosting the Dow.
While chip stocks rallied, several market heavyweights such as Apple and Microsoft fell to keep gains in check on the S&P 500 and Nasdaq. The S&P 500 and the Nasdaq were also pressured by losses in consumer discretionary stocks including Amazon.
Recent selling had dashed expectations for a “Santa Claus rally” in which markets tend to get a late boost over the last five trading days of December and the first two of January, according to the Stock Trader’s Almanac.
The Federal Reserve’s monetary policy trajectory will set the tone for global markets in 2026, after recent economic data and expectations of a new dovish Fed chair prompted investors to price in further reductions.
“The next Fed Chair is probably going to be much more dovish than Jerome Powell. So I would imagine that we actually see in the second half of this year that interest rates go down substantially,” said Dennis Dick, chief market strategist at Stock Trader Network. “And that’s going to be good for all stocks, not just tech stocks.”

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