Key Points
- U.S. stocks had a mixed and quiet start to 2026, with the S&P 500 and Dow up slightly and the Nasdaq down.
- European stocks hit record highs, with London’s FTSE 100 crossing 10,000 for the first time.
- The Federal Reserve will be a major focus in 2026, with a new chair expected to be appointed in May.
- Gold and silver paused their massive rally, posting only small gains on the day.
Wall Street kicked off the new year with a mixed and volatile session. The S&P 500 and the Dow Jones both snapped a four-day losing streak with small gains, but the tech-heavy Nasdaq ended the day slightly down. Trading was quiet, with many people still away for the holidays.
The market in 2025 was surprisingly strong, weathering everything from tariff wars to a historic government shutdown. Now, as we head into 2026, all eyes are on the Federal Reserve.
With Jerome Powell’s term as chair ending in May, President Trump is expected to appoint someone who will push for lower interest rates. This could give the market a short-term boost, but some experts worry it could also threaten the Fed’s independence.
Beyond the Fed, investors will be closely watching the AI industry to see if the massive investments made over the past few years start to pay off. The upcoming midterm elections and ongoing geopolitical tensions in Ukraine and the Middle East will also add to the uncertainty.
While U.S. markets were choppy, European stocks started the new year at record highs, with London’s FTSE 100 hitting the 10,000-point mark for the first time. Tech and defense stocks led the way, and the pan-European STOXX 600 is now approaching its own 600-point milestone.
In the commodities market, gold and silver took a breather after a spectacular 2025. Both metals posted modest gains on Friday, but the wild rally that saw them hit record highs last year seems to have paused for now. The U.S. dollar, which had a terrible 2025, also firmed slightly, while U.S. Treasury yields climbed as investors looked ahead to next week’s jobs data.
