The S&P 500 fluctuated on Friday (January 2), the first trading day of 2026, as gains in semiconductor stocks tried to keep the index steady.

The benchmark index was last up 0.1%, while the Nasdaq Composite fell 0.1%. Both indexes had previously shown solid positive trends earlier in the day, with the S&P 500 and the tech-dominated Nasdaq trading up 0.7% and 1.5%, respectively, at their peaks. The Dow Jones Industrial Average rose 254 points, or 0.5%.

Major chip stocks like Nvidia and Micron Technology rose during the session. Nvidia rose more than 1%, and Micron Technology jumped about 10%. Two companies related to artificial intelligence (AI) were big winners in 2025—Nvidia surged about 39%, while Micron surged more than 240%.

However, other technology sectors outside of chips suffered losses. Software stocks were particularly under pressure, with Salesforce falling 3% and CrowdStrike dropping 4%. Palantir Technologies and Microsoft also declined.

Furthermore, Tesla shares fell more than 2% after the company's fourth-quarter deliveries missed analyst estimates.

Technology was the best trade of 2025, leading the broader market to a sharp rally as investors continued to invest in AI stocks. The S&P 500 rose more than 16% last year, marking its third consecutive annual gain. The Nasdaq surged more than 20% last year, and the 30-stock Dow Jones Industrial Average rose about 13%. All three benchmark indexes reached record highs last year.

"We think there will be a continued rotation back and forth between tech and non-tech sectors, but overall we're going to move higher," said Jay Hatfield, CEO of Infrastructure Capital Advisors. Hatfield, who has a year-end target of 8,000 for the S&P 500, said the rally will be "more balanced" as regional banks outperform and expensive tech stocks like Tesla begin to lag.

"There are themes beyond tech that are very likely to do well this year," he continued.

Wall Street strategists are predicting further gains for the U.S. stock market in 2026. A CNBC Market Strategist Survey shows the average S&P 500 target for this year is 7,629, implying a potential upside of 11.4%.

Friday's session had some bright spots elsewhere in the broader market. Wayfair shares jumped more than 8%, while RH rose about 6% after President Donald Trump on New Year's Eve delayed tariff increases on upholstered furniture, kitchen cabinets, and dressers for one year. The order specifically suspends the 30% tariff on upholstered furniture and the 50% tariff on kitchen cabinets and dressers, maintaining the 25% tariff on those goods that was imposed in September. (alg)

Source: CNBC.com