Wall Street ends mixed at the top of the new year; Treasury yields move higher
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NEW YORK, Jan 2 : U.S. stocks oscillated to a mixed close, U.S. Treasury yields climbed and the dollar firmed on Friday, the first trading day of 2026.
While all three major U.S. stock indexes seesawed for much of the session, the S&P 500 and Dow posted gains, snapping their four-day losing streaks. The tech-heavy Nasdaq posted a nominal loss, weighed down by tech and tech-related megastocks.
All three indexes registered losses for the holiday-shortened week.
"Today is kind of a holiday trading day, lighter volumes, people not engaged normally," said Jed Ellerbroek, portfolio manager at Argent Capital in St. Louis. "Value is outperforming growth and AI infrastructure is up, and a lot of the stocks doing well in sectors like utilities and industrials in particular, energy probably too, those are AI beneficiary stocks."
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Stocks made strong gains in 2025 as markets weathered tariff wars, the longest government shutdown in U.S. history, geopolitical strife as well as threats to central bank independence.
THE FED'S YEAR AHEAD
Markets will focus on monetary policy in the year ahead, as Jerome Powell approaches the end of his tenure as Federal Reserve chair and economic data releases return to their more regular and current release schedule in the aftermath of the federal government shutdown. A spate of delayed indicators due in the coming days could be key in determining the path forward for the central bank.
"One of the most important things will be maintaining Fed independence," said Thomas Martin, senior portfolio manager at Globalt in Atlanta. "Even though the newest members were appointed by (U.S. President Donald) Trump and they're more dovish, they want to at least give the appearance that the Fed is independent because once you lose that, you're kind of like in trouble."
But Ellerbroek disagrees, saying "President Trump has made it clear that he's going to appoint someone as chair who is willing to take direction from him, and he wants rates significantly lower than they are today," adding that "the short-term excitement that lower rates offers is tangible."
The extent to which markets begin to reap the benefits of massive investments in nascent artificial-intelligence technology will also likely receive scrutiny in the year ahead.
The new year also promises to deliver some geopolitically driven volatility, with U.S. congressional midterm elections this autumn and ongoing negotiations toward ending Russia's war in Ukraine, along with ongoing tensions in the Middle East.
The Dow Jones Industrial Average rose 319.10 points, or 0.66 per cent, to 48,382.39, the S&P 500 rose 12.97 points, or 0.19 per cent, to 6,858.47 and the Nasdaq Composite fell 6.36 points, or 0.03 per cent, to 23,235.63.
European shares began the new year at record highs, with a boost from technology and defense stocks. Investors eyed the STOXX 600 as it approached the 600 milestone.
London's blue-chip FTSE 100 index hit the symbolic 10,000-point mark for the first time.
MSCI's gauge of stocks across the globe rose 4.41 points, or 0.43 per cent, to 1,019.15.
The pan-European STOXX 600 index rose 0.67 per cent, while Europe's broad FTSEurofirst 300 index rose 16.23 points, or 0.69 per cent.
Emerging market stocks rose 24.02 points, or 1.71 per cent, to 1,429.34. MSCI's broadest index of Asia-Pacific shares outside Japan closed higher by 1.75 per cent, to 735.19, while Japan's Nikkei fell 187.44 points, or 0.37 per cent, to 50,339.48.
GOLD, SILVER PRESS 'PAUSE'
Gold and silver pared earlier gains, and were last up only modestly following a spate of profit-taking at the end of a year in which the precious metals notched remarkable gains.
Gold's 2025 rise was its biggest in 46 years, while silver and platinum made their largest gains on record, driven by a cocktail of factors including the Fed's rate cuts, geopolitical flashpoints, robust central-bank buying and ETF inflows.
Spot gold rose 0.36 per cent to $4,329.57 an ounce, while spot silver rose 1.6 per cent to $72.39 per ounce.
The dollar moved higher in the aftermath of the greenback's largest yearly drop in eight years.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.19 per cent to 98.43, with the euro down 0.21 per cent at $1.172.
Against the Japanese yen, the dollar strengthened 0.11 per cent to 156.84.
In cryptocurrencies, bitcoin gained 1.69 per cent to $89,789.87. Ethereum rose 4.5 per cent to $3,121.09.
U.S. Treasury yields moved higher as the markets looked ahead to next week's spate of employment data for indications of economic health headed into the new year.
The yield on benchmark U.S. 10-year notes rose 3.8 basis points to 4.191 per cent, from 4.153 per cent late on Wednesday.
The 30-year bond yield rose 3.8 basis points to 4.8682 per cent from 4.83 per cent late on Wednesday.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 0.6 basis points to 3.475 per cent, from 3.469 per cent late on Wednesday.
Oil prices eased after logging their biggest annual loss since 2020 as investors weighed oversupply worries against geopolitical risks.
U.S. crude dipped 0.17 per cent to settle at $57.32 per barrel, while Brent settled at $60.75 per barrel, down 0.16 per cent on the day.
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