Chip stocks provided a boost on Friday, with the Philadelphia SE Semiconductor index rising 4%. Industry and utilities also made gains. Caterpillar and Boeing rose 4.5% and 4.9%, boosting the Dow Jones.While chip stocks rose, several market heavyweights such as Apple and Microsoft fell to keep gains in the S&P 500 and Nasdaq in check.
The S&P 500 and Nasdaq were also pressured by losses in consumer discretionary stocks, including Amazon. Tesla also fell 2.6% after annual revenue fell for a second year.
The Dow Jones Industrial Average rose 319.10 points, or 0.66%, to 48,382.39, the S&P 500 gained 12.97 points, or 0.19%, to 6,858.47 and the Nasdaq Composite lost 6.36 points, or 0.03%, to 23,235.63.
Joe Mazzola, chief trading and derivatives strategist at Charles Schwab, told Reuters that the market is seeing a ‘buy the dip, sell the rip’ trading mentality – with investors taking advantage of short-term market volatility by timing entry and exit points. “But I do think that investors may be a little more conscious about some of the valuations that they’re paying for some of the AI activities,” he said.
“At the same time, when they get the opportunity to buy (during) a pullback, they just keep doing it. I don’t see that stopping at any point.”
Smaller stocks, which have struggled in recent days, also rose, with the Russell 2000 rising 1.1% to break a four-day streak of declines.’
According to the Stock Trader’s Almanac, the recent selling had undermined expectations for a “Santa Claus rally,” in which markets tend to get a late boost during the last five trading days of December and the first two of January.
The Federal Reserve’s monetary policy stance will set the tone for global markets in 2026, after recent economic data and expectations of a new dovish Fed chairman prompted investors to price in further cuts.
“The next Fed chairman will likely be much dovish than Jerome Powell, so I imagine we will actually see rates fall substantially in the second half of this year,” said Dennis Dick, chief market strategist at Stock Trader Network.
“And that will be good for all stocks, not just technology stocks.”
A key highlight for January will be next week’s labor market data, especially after Powell warned of further rate cuts at the December central bank meeting until there is more clarity on employment.
Wall Street had staged a stellar comeback in 2025 from April’s lows, when Trump’s “Liberation Day” tariffs triggered a collapse in global markets, steering investors away from U.S. stocks and threatening growth by clouding the interest rate outlook.
Possible tariff surprises from Trump will remain on the radar, especially after the White House said he signed a proclamation to delay tariff increases on upholstered furniture, kitchen cabinets and vanities for another year.
Shares of furniture retailers Wayfair, Williams-Sonoma and RH finished 6%, 5% and nearly 8% higher, respectively.
On the NYSE, advancing issues outnumbered declining issues by a ratio of 2.01 to 1. There were 236 new highs and 95 new lows on the NYSE.
On the Nasdaq, 2,978 stocks rose and 1,818 fell as advancing issues outnumbered declining stocks by a 1.64-to-1 ratio.
The S&P 500 posted 9 new 52-week highs and 9 new lows, while the Nasdaq Composite posted 54 new highs and 79 new lows.
Volume on U.S. exchanges was 15.92 billion shares, compared to the full-session average of 15.87 billion over the past 20 trading days. (Reporting by Purvi Agarwal and Nikhil Sharma in Bengaluru and Saeed Azhar in New York; Editing by Krishna Chandra Eluri and David Gregorio)
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