Trader Peter Tuchman donned '2026' glasses as he worked on the floor of the New York Stock Exchange during the opening bell on December 31, 2025, signaling the inauguration of a new trading year.
As 2026 kicks off, the stock market remains as split as it was last year. On the first trading day of the year, Friday's market activity reflected this ongoing division. Initially, the S&P 500 rose, driven by strength in semiconductor stocks, but it lost momentum as the day continued, falling 0.1%.
An examination of the S&P 500 reveals a clear divide. While five sectors, notably industrials, energy, and utilities, saw gains exceeding 1%, six others faltered, with consumer discretionary and communication services leading the decline.
This trading pattern mirrors a theme that has developed over recent months: the shift from a bull market led by artificial intelligence-driven tech stocks to a broader base of sectors. As traders express concerns over the challenges facing tech stocks in 2026, they have begun shifting focus to other sectors.
The Nasdaq Composite, with its large concentration of tech companies, concluded the previous year with losses over two consecutive months.
Market strategists are advocating for broader market participation, suggesting that economically sensitive companies may assume leadership in 2026, which could bolster the longevity of the bull market. However, such a shift might make it more challenging for the overall index to achieve significant gains.
According to the 2026 CNBC Market Strategist Survey, Wall Street anticipates an approximately 11% rise for the S&P 500 this year—a decent increase but less than the gains seen in the past three years.
Some analysts express caution. Bank of America's strategist, Savita Subramanian, pointed out that the S&P 500 is currently expensive, underscoring potential risks for the index in 2026. Her year-end target of 7,100 is among the most conservative forecasts.
Adding to the cautionary sentiment, Adam Parker, founder of Trivariate Research, voiced concern on CNBC's 'Squawk on the Street' about the prevailing optimism for 2026. 'I think the consensus is pretty bullish,' Parker remarked. 'You're betting on strong earnings growth, and I'm not sure how likely that is.'
Within the tech sector, semiconductor stocks have stood out positively. By midday, Nvidia was the only one of the Magnificent Seven companies to post a gain, climbing 1.5%. The VanEck Semiconductor ETF increased nearly 3%, with notable rallies from Micron, up over 7%, and AMD, rising more than 3%.