Stocks staged a rally on the first day of trading in 2026. It may not be the Santa Claus rally that many investors hoped for, but it aligns with the general sense that the markets will grind higher, despite many stocks being overvalued by traditional metrics.
Like many of the market rallies in 2025, this one is being led by technology stocks. This may prompt investors to question whether the sector rotation that began in December can be sustained. Or will 2026 be another year when tech stocks, particularly AI stocks, do most of the market’s work?
Some of that will hinge on the Federal Reserve’s decision on interest rates, which happens in a few weeks. Before then, investors will receive the December Jobs report next Friday, and the week of Jan. 12 will kick off the fourth-quarter earnings season.
