Stocks finished trading on Friday — the second-to-last session of the “Santa Claus rally” period — with the Dow Jones Industrial Average (^DJI) leading the major indexes higher to open the new year as investors began to evaluate the 2026 landscape.

For the holiday-abbreviated week, the blue-chip Dow led the way up with a gain of 319 points, or 0.66%. The benchmark S&P 500 (^GSPC) picked up 0.2%, while the tech-heavy Nasdaq Composite (^IXIC) finished just barely below the flatline in a session that saw several of the “Magnificent 7” stocks stumble while semiconductor names soared.

In the week ahead, the first full week of trading in 2026 will see economic data get back on track after last year’s multi-month disruption following the 43-day government shutdown that spanned all of October and about half of November.

On Friday, the December jobs report is expected to show a slowdown in hiring in the final month of 2025, with economists expecting nonfarm payrolls to grow by 55,000, down from November’s job gains of 64,000. The unemployment rate, which hit a four-year high of 4.6% in November, is expected to fall by 0.1%.

Elsewhere on the calendar, ADP’s monthly private payrolls report, monthly job cuts data from Challenger, Gray & Christmas, and the weekly report on initial jobless claims will round out a heavy focus on the labor market to start the month.

All of this jobs data will be closely watched for any impacts on bets that the Federal Reserve cuts rates when it meets later this month, though data from the CME Group as of Friday showed traders pricing in an 85% chance that the Fed keeps rates in their current range of 3.5%-3.75%.

On the Federal Reserve front, investors will also be alert to any announcements from President Trump on his nomination to succeed Fed Chair Jay Powell, whose term leading the central bank expires in May. The president said late last month that he expected to name Powell’s replacement in early January.

Readings on service sector activity and consumer sentiment will round out the economic data calendar in the coming week, while the earnings calendar will remain light, with Constellation Brands (STZ), Albertsons (ACI), Jefferies Financial Group (JEF), and Applied Digital (APLD) the most notable names set to report quarterly results this coming week.

Big banks are expected to get earnings season underway in earnest in a little less than two weeks.

Despite — or perhaps because of — the year’s ups and downs, 2025 was quite good to investors.

The benchmark S&P 500 rose over 16% for the year, while the Nasdaq Composite led gains with a more than 20% jump. And this after a sharp downturn in April that threatened to send the markets spiraling into a bear market in a matter of days.

“The economy showed remarkable strength by overcoming higher inflation, a slowing labor market, fewer rate cuts than originally expected, and a sharp rise in the effective tariff rate,” Adam Turnquist, chief technical strategist for LPL Financial, wrote in emailed commentary.

Nvidia (NVDA), the dominant chipmaker globally, saw its stock rise more than 30%, while fellow “Magnificent Seven” giant Google (GOOG) led the group of tech giants, rising more than 60%. Notably, these two stocks were the only members of the Mag 7 to outperform the S&P 500 last year.

Goldman Sachs strategist Peter Oppenheimer argued in the bank’s 2026 global outlook report that while valuations are lofty and stock prices have increased sharply, the tech sector’s growth isn’t solely an AI story with no other legs.

Instead, the sector’s performance has been running since the financial crisis and “has been supported by superior profit growth.” Valuations, he wrote, also aren’t as extreme as in previous bubbles, such as the heights reached during the dot-com bubble through the turn of the 21st century, and speculation isn’t as irrational as it was in those earlier periods.

“The ascent of technology in terms of size and influence, particularly in the US equity market, has been a function of extraordinary fundamental growth rather than irrational speculation about the future,” Oppenheimer wrote.

Overall, Wall Street strategists see the S&P 500 rising 10%, on average, in the year ahead, according to Bank of America.

The question for investors in 2026 is whether the tech- and AI-themed upward push we’ve seen in markets will continue — even with the moves last year showing investors, on a single-stock level, starting to move away from the Mag 7 leadership group.

HSBC equity strategist Nicole Inui wrote in the firm’s 2026 outlook that 2025’s stock market strength was “a concentrated rally, not broad-based.” Inui noted that the equal-weighted S&P 500 underperformed the market cap-weighted S&P 500 for the third year in a row, with tech accounting for around 90% of returns after the bounce that followed President Trump’s “Liberation Day” tariff announcements and his subsequent walk-back.

But this leadership position also doesn’t mean the strength of those companies is unsustainable.

In a note to clients, Comerica Wealth Management CIO Eric Teal compared today’s market to a “perennial gale,” a phrase coined by Austrian economist Joseph Schumpeter.

“The capitalist economy is often swept by a ‘Perennial gale of creative destruction’ — a gale of innovation,” Teal wrote. “However, this advancement is a natural process of industrial mutation that leads to dramatic economic changes but also enormous benefits to society and business.”

How that “perennial gale” sweeps through the market in 2026, at a moment when the AI trade is already heated and facing real-world stumbling blocks, is likely to be the most closely watched storyline for investors.

Economic data: ISM manufacturing, December (48.4 expected, 48.2 previously)

Earnings calendar: No notable earnings.

Economic data: S&P Global US services PMI, December final reading (52.9 expected, 52.9 previously); S&P Global US composite PMI, December final reading (53.0 previously)

Earnings calendar: AAR Corp. (AIR)

Economic data: MBA mortgage applications, week ended Jan. 2; ADP employment change, December (+48,000 expected, -32,000 previously); ISM services PMI, December (52.3 expected, 52.6 previously); JOLTS job openings, November (+7.72 million expected, +7.67 million previously); Factory orders, October (-1.1% expected, +0.2% previously); Durable goods orders, October final reading (-2.2% expected, -2.2% previously)

Earnings calendar: Constellation Brands (STZ), Jefferies Financial Group (JEF), Albertsons Companies (ACI), Applied Digital Corporation (APLD)

Economic data: Challenger job cuts, year-on-year, December (+23.5% previously); Initial jobless claims, week ended Jan. 3 (215,000 expected, 199,000 previously); Continuing claims, week ended Dec. 27 (1.9 million expected, 1.86 million previously); Trade balance, October (-$58.8 billion expected, -$52.8 billion previously); NY Fed one-year inflation expectations, December (+3.2% previously)

Earnings calendar: RPM International (RPM), TD SYNNEX Corporation (SNX), Acuity (AYI), Commercial Metals Company (CMC), WD-40 Company (WDFC)

Economic data: Nonfarm payrolls, December (+55,000 expected, +64,000 previously); Change in private payrolls, December (+63,000 expected, +69,000 previously); Average hourly earnings, month-on-month, December (+0.3% expected, +0.1% previously); Average hourly earnings, year-on-year, December (+3.6% expected, +3.5% previously); Unemployment rate, December (4.5% expected, 4.6% previously); Housing starts, October (1.32 million expected); University of Michigan consumer sentiment, January, preliminary reading (53.5 expected, 52.9 previously)

Earnings calendar: No notable earnings.

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