Wall Street closed mixed on Friday, pulled up by energy and industrial stocks. The much-awaited Santa Claus rally remained elusive as investor mood was cautious, shaped by lingering uncertainty over the growth outlook. Two of the three benchmark indexes finished in the green, while one finished virtually unchanged.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.7%, or 319.1 points, to close at 48,382.39. Sixteen components of the 30-stock index ended in positive territory, while 14 ended in the negative.
The tech-heavy Nasdaq Composite lost 6.36 points, less than 0.1%, to close at 23,235.63.
The S&P 500 added 12.97 points, or 0.2%, to close at 6,858.47. Eight of the 11 broad sectors of the benchmark index closed in the green. The Energy Select Sector SPDR (XLE), the Industrials Select Sector SPDR (XLI) and the Materials Select Sector SPDR (XLB) advanced 2.1%, 1.9% and 1.5%, respectively, while the Consumer Discretionary Select Sector SPDR (XLY) receded 1.1%.
The fear gauge CBOE Volatility Index (VIX) decreased 2.9% to 14.51. A total of 15.92 billion shares were traded on Friday, higher than the last 20-session average of 15.87 billion. Advancers outnumbered decliners by a 2.01-to-1 ratio on the NYSE and by a 1.64-to-1 ratio on the Nasdaq.
Cautious Start to 2026 Leaves Wall Street Mixed as Santa Claus Rally Fizzles
On Friday, investors balanced selective buying with broader caution to start the new year. Gains in energy and industrial shares reflected optimism around steady demand, infrastructure-related activity and firmer commodity prices, which provided support to the major indexes. At the same time, overall market momentum remained restrained as investors reassessed economic conditions following a volatile end to 2025. Lingering concerns about the pace of economic growth, interest rate direction and global macro risks limited enthusiasm across several sectors, leading to uneven performance.
Thin holiday-influenced trading volumes also contributed to choppy moves, amplifying modest gains and losses. Many market participants adopted a wait-and-see approach, preferring to rotate into sectors perceived as more resilient while trimming exposure to areas viewed as sensitive to policy and growth uncertainty. As a result, the push from energy and industrials was enough to offset weakness elsewhere, leaving Wall Street with a mixed close rather than a clear directional trend. However, this also meant that the usual year-end phenomenon known as the “Santa Claus rally” failed to materialize. This was primarily due to persistent macro uncertainty, profit-taking after a strong 2025, thin holiday liquidity, and caution over interest rates and growth outlook.
Consequently, shares of Chevron Corporation CVX and Caterpillar Inc. CAT rose 2.3% and 4.5%, respectively. While CVX carries a Zacks Rank #3 (Hold), CAT has a #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Tariff Uncertainty Keeps Investors Cautious
Potential tariff surprises from President Donald Trump kept investors wary, reinforcing a cautious tone across markets. Ongoing uncertainty around trade policy continues to weigh on sentiment, particularly for sectors tied to global supply chains and consumer-oriented goods.
Some near-term pressure eased after the White House said Trump signed a proclamation delaying planned tariff increases on upholstered furniture, kitchen cabinets and vanities for another year. The move provided temporary relief to importers, retailers and home-related manufacturers grappling with uneven demand. Still, the delay underscored the unpredictable nature of tariff policy, keeping investors alert to the risk of renewed trade actions ahead.
Weekly Roundup
For the week ended Jan. 2, 2026, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite declined roughly 0.7%, 1%, and 1.5%, respectively. Markets retraced modestly as broader economic and policy uncertainty weighed on sentiment, holiday-thin trading dampened momentum and investors reassessed growth, interest rate expectations and risk appetite.
No economic data was released on Friday.
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Chevron Corporation (CVX): Free Stock Analysis Report Caterpillar Inc. (CAT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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