U.S. stock index futures advanced on the first trading day of 2026, recovering after Wall Street logged declines in the last few sessions of 2025, as improving investor sentiment increased risk appetite.
The S&P 500, Dow and Nasdaq posted double-digit gains in 2025, their third consecutive year in the green, a run last seen during 2019-2021. The Dow posted its eighth monthly gain on the trot, the longest such streak since 2017-2018.
The rally was bolstered by an insatiable appetite for artificial intelligence stocks that pushed all three indexes to record highs last year.
However, the momentum slowed heading into end-2025 where the three main indexes logged declines for the last four sessions. That defied expectations for a “Santa Claus rally”, which typically sees the S&P 500 gain over the last five trading days of December and the first two in January, according to the Stock Trader’s Almanac.
The losses were led by tech shares as investors repositioned their holdings for 2026, on expectations that growth would broaden across sectors this year.
On Friday, these heavyweight stocks stabilized in premarket trading, with Nvidia up 1.8 per cent and Broadcom adding 1.6 per cent.
At 05:45 a.m. ET, Dow E-minis were up 171 points, or 0.35 per cent, S&P 500 E-minis were up 41.5 points, or 0.60 per cent, and Nasdaq 100 E-minis were up 267 points, or 1.05 per cent.
“We shouldn’t extrapolate too far, as the first trading day has been an incredibly poor guide in recent times to how the rest of the year plays out,” said analysts at Deutsche Bank.
They also highlighted that in the last three years, the S&P 500 started with a negative first session but ended with double-digit annual gains.
Wall Street made a stellar comeback in 2025 from April’s lows when Trump’s “Liberation Day” tariffs sparked a meltdown in global markets, sent investors away from U.S. stocks and threatened growth by clouding the interest rate outlook.
The Federal Reserve’s monetary policy trajectory will set the tone for global markets in 2026, after recent economic data and expectations of a new dovish Fed chair prompted investors to price in further reductions.
A final reading of S&P Global’s economic activity survey is due later in the day.
But next week’s labour market data will grab the spotlight, especially after Fed Chair Jerome Powell cautioned against further interest rate cuts until there was more clarity on jobs, at the central bank’s December meeting.
Among stocks, U.S.-listed shares of Baidu jumped about 12 per cent before the bell after the Chinese internet search giant said on Friday its AI chip unit Kunlunxin has confidentially filed a listing application with the Hong Kong stock exchange on Jan. 1, paving the way for a spin-off and separate listing.
European stocks began 2026 at fresh record highs. London’s blue-chip FTSE 100 index hit the symbolic 10,000 points mark for the first time on Friday, while the pan-European STOXX 600 index hit another peak while on course for its third consecutive weekly advance.
The STOXX index finished 2025 with its best showing since 2021 on the back of falling interest rates, Germany’s fiscal boost, and a rotation out of lofty U.S. tech names.
Asia, meanwhile, saw Hong Kong stocks kick off 2026 by climbing to a 1½-month high, and markets in Taiwan, South Korea and Singapore hit record highs. Markets in Japan and China were closed.
Precious metals extended their runaway rally from last year, with spot gold up 1.6 per cent to US$4,384 an ounce, while spot silver jumped 4.3 per cent to US$74.37 an ounce.
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.
The U.S. dollar was flat, with the euro down very slightly at US$1.1735, while sterling gave up early gains to steady at US$1.3456. The yen was steady too at 156.79 per dollar, not far from levels that kept investors skittish about possible intervention from Japanese authorities to shore up the ailing currency.
With further easing expected by the Fed this year even as some of its peers look set to hike, that has in turn dragged on the dollar, which in 2025 clocked its biggest annual drop in eight years.
The greenback has also been roiled by Trump’s chaotic trade policies and worries about Fed independence – an issue set to come to the fore this year as the U.S. president prepares to announce Chair Jerome Powell’s replacement later this month.
In commodities, oil prices were slightly lower on Friday after posting their biggest annual loss since 2020. Brent crude futures were down 0.3 per cent to US$60.62 per barrel, while U.S. crude fell 0.4 per cent to US$57.20 a barrel.
– Reuters