Dow closes higher on first day of 2026, still no Santa Claus rally | Today News

Nvidia, Intel helps market recovery after blip at midday Industrials, utilities post gains

By Saeed Azhar, Purvi Agarwal and Nikhil Sharma

The Dow ended higher on Friday, starting 2026 by snapping a four-day losing streak, but gains in chip makers Nvidia and Intel could not hoist Wall Street's other indexes into solidly positive territory.

In 2025, the Dow, the S&P 500 and the Nasdaq all notched double-digit gains, their third straight year in the green, a run last seen during 2019-2021.

Chip stocks provided a boost on Friday, with the Philadelphia SE Semiconductor index sharply up. Industrials and utilities also gained. Caterpillar and Boeing rose sharply, boosting the Dow.

The S&P 500 and the Nasdaq were pressured by losses in consumer discretionary stocks including Amazon. Tesla also slid after annual sales fell for a second year. According to preliminary data, the S&P 500 gained 12.52 points, or 0.18%, to end at 6,858.02 points, while the Nasdaq Composite lost 5.30 points, or 0.02%, to 23,236.69. The Dow Jones Industrial Average rose 311.99 points, or 0.67%, to 48,383.22. "Stocks trade expensive on 18 of 20 measures, and we see elevated risks to the index level in the near term," said Savita Subramanian, Bank of America's equity and quant strategist, in a note.

From a historical perspective, the S&P 500 as currently constituted is higher quality, more asset light and less leveraged, "but risks to the index abound in 2026," the note said.

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."

A key highlight for January will be next week's labor market data, especially after Powell, at the central bank's December meeting, cautioned against further interest rate cuts until there was more clarity on jobs.

Wall Street had made a stellar comeback in 2025 from April's lows when Trump's 'Liberation Day' tariffs sparked a meltdown in global markets, sent investors away from U.S. stocks and threatened growth by clouding the interest rate outlook.

Possible tariff surprises from Trump will be on the radar, especially after the White House said he signed a proclamation to delay increases in tariffs for upholstered furniture, kitchen cabinets and vanities for another year.

Shares of furniture retailers Wayfair, Williams-Sonoma and RH ended sharply higher. (Reporting by Purvi Agarwal and Nikhil Sharma in Bengaluru and Saeed Azhar in New York; Editing by Krishna Chandra Eluri and David Gregorio)