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2d ago

Dow Leads 2026 Open as Cyclicals Gain and AI-Chip Rally Extends

Policy uncertainty is building after Fed minutes signaled fewer cuts.

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A trader works on the floor of the New York Stock Exchange (NYSE) in New York, US, on Friday, Jan. 2, 2026. The S&P 500 Index retreated from early Friday gains as worries about stretched valuations offset optimism about next week’s massive CES conference and signs President Donald Trump was easing up on tariff policies.
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Overview

  • U.S. stocks began 2026 with the Dow up 0.66%, the S&P 500 up 0.19%, and the Nasdaq nearly flat as investors rotated toward industrials and other cyclicals.
  • Semiconductor shares surged on AI demand expectations, with SanDisk up 16%, ASML up 9%, and Intel up 7%.
  • December Federal Reserve minutes showed divisions and indicated fewer 2026 rate cuts than investors had priced, a tone that supported the dollar and nudged yields higher.
  • The backdrop is a rare cross-asset boom in 2025 across stocks, bonds, credit, and commodities—the strongest since 2009—prompting BlackRock to warn of a "diversification mirage."
  • The first full week features closely watched labor data, with economists expecting 55,000 December payroll gains and markets mostly betting on no January rate move, as investors await the president’s expected early January Fed chair nomination.