Introduction to 2026 Stock Market
The year 2026 has begun, and the U.S. stock market is showing similarities to the previous year, 2025. Artificial intelligence (AI) stocks jumped on the first Friday of the year, while the rest of the market remained mixed. The S&P 500 ended the trading session slightly higher, while the tech-heavy Nasdaq closed fractionally lower, and the Dow Jones Industrial Average ticked up around 0.6%.
The AI Boom and Its Impact
The AI boom, which fueled much of investors’ stock gains in 2025, is likely to remain a major theme for markets in the year ahead. Analysts believe that global growth and the likelihood of falling interest rates will boost U.S. stocks. According to Jim Reid, Deutsche Bank’s global head of macro research and thematic strategy, "most financial assets had a decent performance in 2025, with global equities, bonds, credit, and emerging market assets all having a strong year." This was driven by continued global growth, ongoing optimism around AI’s potential, and further central bank rate cuts.
Wall Street Analysts’ Predictions
Wall Street analysts generally concur with this assessment. Every analyst polled in a recent survey predicted that the S&P 500 will rally, with the consensus of a 9% increase for the year. This would be only slightly less than the index’s average return over the last 20 years. Not a single analyst predicted that the S&P 500 will decline on an annual basis.
Top Gainers and Losers
Many AI-related companies started the year’s trading with gains. Sandisk, Micron, Western Digital, Intel, and Constellation Energy accounted for many of the top gainers. These moves were fueled by news about two AI IPOs in Asia and a paper published by China’s DeepSeek, which laid out how AI could potentially be developed in a more efficient manner. Trillion-dollar tech firms Nvidia, Broadcom, and Taiwan Semiconductor also jumped on Friday.
Other Market Trends
Home furnishing sellers RH and Wayfair ended the day sharply higher after President Donald Trump delayed a wave of tariffs that were set to kick in on New Year’s Day. Precious metals such as gold and silver, which posted their best annual gain since the 1970s in 2025, also began the day slightly higher. However, gold reversed and ended the day slightly lower. WTI and Brent crude oil declined slightly, which is a positive sign for consumers.
Global Market Performance
Despite 2025’s strong gains, U.S. equities still underperformed international stocks by the widest margin since 2009. The S&P’s 16% gain in 2025 was trounced by a more than 30% gain by the MSCI All Country World ex USA index. Some markets soared even more than that, with South Korea’s Kospi benchmark surging 76% thanks to the likes of electronics giant Samsung and AI-linked chipmaker SK Hynix.
Challenges and Uncertainties
Bank of America senior U.S. economist Aditya Bhave warns that "we have this really interesting dichotomy between the soft labor data…and the strength of the consumer." This balance could tip either way, making it challenging to predict the market’s performance. Bank of America cautiously projects the S&P 500 will rise only about 3.7% from where it ended 2025.
Conclusion
In conclusion, the 2026 stock market is off to a similar start as 2025, with AI stocks leading the charge. While analysts are generally optimistic about the market’s performance, there are uncertainties and challenges that could impact the market’s trajectory. As Savita Subramanian, Bank of America’s head of U.S. equity strategy, said, "not as exciting as what we’ve enjoyed for the last few years, but still, you know, lots of pockets for real strong upside." Only time will tell how the market will perform in 2026.
