Stocks Kick Off 2026 With Broad Rally as S&P 500 Extends Record Run

U.S. equities closed the first full trading week of 2026 on a strong note, with broad participation lifting the major averages to fresh highs. The S&P 500 rose 0.7% to set another record, while the Nasdaq Composite gained 0.8% and the Dow Jones Industrial Average advanced 0.5%, with the Dow also finishing at a new record closing level.

Trading began on a cautious footing as investors digested a heavy slate of economic data, led by the December Employment Situation report. Payroll growth came in slightly below expectations at 50,000, while the unemployment rate edged down to 4.4% from 4.5%. Average hourly earnings accelerated to a 3.8% annual pace, reinforcing the view that wage pressures remain firm. The report pushed market expectations for the next Federal Reserve rate cut from April to June, but overall it painted a labor-market picture strong enough to ease concerns about consumer spending and broader economic momentum.

As the session progressed, confidence in a solid economic backdrop for 2026 fueled broad-based buying, echoing the tone seen earlier in the week. Nine of the eleven S&P 500 sectors finished higher, supported by a mix of macro optimism and sector-specific catalysts.

Technology led the advance, rising 1.0% as semiconductor stocks rebounded sharply from the prior session’s pullback. The semiconductor index surged 2.7%, with storage and chip names driving the move. Sandisk jumped nearly 13% after reports that the company plans to significantly raise enterprise SSD pricing in early 2026 amid growing AI-driven demand. Intel also posted a double-digit gain after positive commentary from President Trump following a meeting with its CEO.

Consumer discretionary stocks added 1.1%, buoyed by a powerful rally in homebuilders. Shares of major builders surged after President Trump directed Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds, reinforcing expectations for increased support in the housing market. Additional encouragement came from housing data showing single-unit starts rising to their highest level since July, despite an overall decline in headline housing starts. The home construction ETF finished the day up more than 6%.

Not all discretionary names participated. Several retail stocks traded lower after the Supreme Court did not issue a ruling on the legality of President Trump’s IEEPA tariffs, a decision many market participants had anticipated. The next opportunity for a ruling is expected next Wednesday.

Materials were another standout, climbing 1.8% as precious metals prices rallied. Utilities gained 1.2%, supported by strength in electric power companies following a high-profile power purchase agreement involving Vistra and Meta Platforms.

Health care and financials were the only sectors to finish lower, down 0.6% and 0.4%, respectively. Financials lagged as investors positioned ahead of a busy week of bank earnings.

Beyond large caps, smaller stocks continued to show relative strength. The Russell 2000 rose 0.8% and the S&P MidCap 400 added 0.9%, extending a trend of outperformance versus larger-cap indices in the opening weeks of the year.

Overall, markets have started 2026 with notable momentum, driven by broadening leadership and a macro environment that remains supportive of growth. While upcoming inflation data and a heavier earnings calendar will test that optimism, the prevailing economic signals continue to favor further upside in equities.

Our FTinvest 11 model portfolio climbed 0.78% to close at 939.15, setting a new all-time high. This milestone marks a strong start to 2026, as the portfolio not only recovers from recent volatility but reaches new record territory. The breakout reflects the continued strength of its value-focused strategy and the underlying quality of its holdings.

With this new peak, FTinvest 11 extends its lead over broader benchmarks and reinforces confidence in its long-term approach. The portfolio’s resilience and steady upward momentum signal robust positioning in the face of early-year market shifts.