Trading was shortened this week due to holidays, with U.S. stocks opening modestly higher as renewed investor interest in artificial intelligence (AI) boosted shares of tech giants. The dollar weakened, while oil and gold prices climbed.
At 9:31 a.m. in New York, the S&P 500 and Dow Jones Industrial Average rose 0.5%, while the Nasdaq 100 gained 0.8%. The S&P 500 erased its December losses and is on track for an eighth consecutive monthly gain—its longest winning streak since 2018. NVIDIA reportedly informed customers of plans to deliver its first batch of H200 AI chips by mid-February, lifting its stock price.
With markets performing strongly this year, a key question is whether investors can sustain this bullish momentum into 2026.
Equity positioning continues to rise, with fund managers holding historically low cash levels. Optimism about further gains has outweighed concerns over stretched AI valuations. The Federal Reserve's policy path also remains in focus, with markets pricing in two rate cuts next year.
"The correction triggered by April tariffs in 2025 was volatile, and we believe risks of turbulence in 2026 have not been eliminated," said Clark Bellin of Bellwether Wealth.
While Bellin expects the tech sector to remain in a consolidation phase, he bets a bottom will form in the coming months. He also anticipates the Fed will pause further rate cuts until around mid-year, when a new chair takes office. However, he noted that even without additional rate cuts, stocks could still advance during this period.
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