The Christmas rally failed: how did US stocks start the year?

US stocks ended the session on January 2, the first trading day of 2026, with mixed results after three consecutive years of double-digit growth. The Nasdaq Composite technology sector index, despite gains in semiconductor giants Nvidia (+1.26%), AMD (+4.35%), and Micron (+10.52%), fell just below zero (-0.03%). The S&P 500 broad market index added 0.2%, while the Dow Jones Industrial Average blue chip index rose about 0.6%.

The S&P 500 was affected by the weakening of technology companies' positions, according to Bloomberg. In particular, Tesla shares fell 2.59% after the company's global electric vehicle deliveries fell short of analysts' expectations and Tesla's own previous consensus forecast. Overall, the stocks of the "Magnificent Seven" fell by about 1%, according to Bloomberg's calculations.

However, there were "pockets of growth" in the market on January 2, the agency notes: for example, shares of some semiconductor equipment manufacturers (Nvidia and Micron Technology), as well as shares of energy, industrial, and utility companies, mostly rose.

The mixed start to the year contradicts the optimistic mood of most strategists that prevailed at the end of 2025, the agency notes. Despite continued market caution about overvalued companies and fears that huge capital investments may not pay off, forecasts pointed to a continued bullish trend in 2026.

Market participants "are not necessarily cautious," said Steve Sosnick, chief strategist at Interactive Brokers, commenting on the situation in the markets. "They may enter the new year already fully invested (i.e., without free cash)," he explained.

Wall Street's attempt to stage a "Christmas rally" — a rally in US stock markets during the last five trading days of December and the first two days of January — has so far failed, Yahoo Finance notes. The S&P 500 index fell nearly 1% during this period.

Markets are showing mixed dynamics after the end of a volatile 2025, which nevertheless ended with significant growth in the major US indices. The S&P 500 gained more than 16% over the past year, the Nasdaq Composite jumped more than 20%, and the Dow Jones Industrial Average rose just over 13%.

Now investors' attention is shifting to 2026, according to Yahoo Finance. And although forecasts for US stock performance in the coming year are optimistic—all Wall Street analysts monitored by Bloomberg predict growth in US stocks for the fourth consecutive year—there are still many risks, the agency notes. These include a bubble in the artificial intelligence market; US Federal Reserve interest rate decisions that may exceed expectations; and Donald Trump's second year as US president, which may bring even more unexpected shocks than the first.

However, Bloomberg writes that the rapid growth of the US stock market over the past three years has negated any bearish forecasts. The average forecast for the S&P 500 at the end of the year is for further growth of 9%, the agency notes.

This article was AI-translated and verified by a human editor