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All three main U.S. equity indexes opened 2026 in the green, but stocks struggled for direction through most of the first trading day of the new year. Price action was mixed within key sectors and subgroups, such as technology and the Magnificent 7, at what is also the beginning of a new era for financial markets.
It was another low-volume session as investors, traders and speculators remain in holiday mode until next week. Energy stocks led the way higher on Friday, while industrials, materials and utility stocks also posted sector gains of greater than 1%.
Tech stocks rallied late to post modest gains, but consumer discretionary and communication services stocks led the way lower.
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Nvidia (NVDA, +1.3%) was among the top six Dow Jones stocks, but fellow Mag 7 stocks Apple (AAPL, -0.3%), Amazon.com (AMZN, -1.9%) and Microsoft (MSFT, -2.2%) weighed on the index.
Meanwhile, Boeing (BA, +4.9%), Caterpillar (CAT, +4.5%), Goldman Sachs (GS, +4.0%), Chevron (CVX, +2.3%) and UnitedHealth Group (UNH, +1.9%) were all up more than 1.9%.
By Friday’s closing bell, the Dow Jones Industrial Average had added 0.7% to 48,382, and the S&P 500 was up 0.2% at 6,858, as both indexes ended four-session losing streaks. The Nasdaq Composite rallied off its intraday lows but was down 0.03% to 23.235, extending its losing streak to five.
Warren Buffett is officially retired
Berkshire Hathaway (BRK.B, -1.1%) underperformed the main U.S. stock market indexes on Friday, marking the first trading day of its post-Oracle of Omaha era. Tough to say goodbye to probably the greatest of all time.
Warren Buffett announced his retirement in May, and it became official at the end of 2025. No longer CEO, Buffett will continue to chair Berkshire’s board while Greg Abel makes all the executive decisions.
And we will continue to refer to the Berkshire Hathaway portfolio as Warren Buffett stocks.
The end of the Santa Claus Rally is only a beginning
Since the official start of the seven-day Santa Claus Rally period on December 24, the S&P 500 has declined from 6,909.79 to 6,858.47. Since 1950, the S&P has posted an average gain of 1.3% during the period. As we know from Yale Hirsch, “If Santa Claus should fail to call, bears may come to Broad and Wall.”
When the S&P 500 finishes in the green during those crucial seven days, good things usually do follow, including an average gain of 2.6% following a positive period.
So, what happens now, when the market didn’t rally to end the year? “Failure to have a Santa Claus Rally tends to precede bear markets,” Jeffrey Hirsch said last month. “Down SCRs were followed by flat years in 1994, 2005 and 2015, two nasty bear markets in 2000 and 2008, a mild bear that ended in February 2016 and the Tariff Tantrum early in 2025.”
But remember, this is just an indicator, not a crystal ball.
And there’s a little more to it, too. The “Santa Claus” period is just “the first leg of our January Indicator Trifecta, which includes the ‘First Five Days’ and the full month ‘January Barometer,'” Hirsch explained.
Jeff’s father, Yale, identified these indicators in 1972. “This January Trifecta helps us affirm or readjust our outlook. When we hit this Trifecta and all three are positive, the S&P is up 90.6% of the time (29 of 32 years) with an average gain of 17.7%.”
This means we still have to wait and see to get an idea of what 2026’s stock market will look like. And there’s plenty more data to come: Markets will benefit from a timely nonfarm payrolls report for December next Friday, the “marquee release” on the economic calendar, as BMO Capital Markets economists Michael Gregory and Shelly Kaushik note.
Gregory and Kaushik expect “sluggish results,” including approximately 50,000 new jobs and an unemployment rate of 4.6%. The economists suggest markets will also weigh third-quarter productivity data “for insights on how AI and other capex might be both a boon for overall GDP growth but a bane for the labor market.”
