Holiday Rally on Hold:
Stocks trended lower last week amid signs of year-end profit-taking and some sour investor sentiment over the Fed meeting minutes.
The S&P 500 Index fell 1.03%, while the Nasdaq Composite Index lost 1.52%. The Dow Jones Industrial Average slid 0.67%. The MSCI EAFE Index, which tracks developed overseas stock markets, ticked up 0.31%.1,2
Santa Rally, Interrupted
Stocks opened lower to start the shortened holiday week with tech shares under pressure. Markets then moved sideways, but came under pressure after minutes from the December Federal Reserve meeting were released. Investors digested the details, which showed members remained divided.3,4
Stocks recovered some ground on the first trading day of 2026. The tech sector was mixed, with AI chip stocks pushing higher, while other areas of technology, especially software companies, declined. Overall, the S&P 500 and Dow Industrials logged gains to kick off the new year, which helped pair losses from earlier in the week.5,6
It remains to be seen whether the “Santa Claus rally,” which ends Monday, January 5, will materialize. The Santa period is the last five trading days of December through the first two trading days of the new year.
Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Charles Schwab
Focus on the Fed
There was little economic data last week, leaving investors to focus mostly on the minutes from the Fed’s December meeting. The minutes, released Tuesday, revealed a divided Federal Open Market Committee regarding short-term interest rates. The news unsettled investors a bit, which led to some selling pressure.7
A divided Fed has been a persistent theme during the second half of 2025, and investors will closely watch in 2026 to see whether the Fed’s outlook may change with the appointment of a new Fed Chair.
This Week: Key Economic Data
Source: Bloomberg Finance L.P.
This Week: Companies Reporting Earnings
Source: EarningsWhispers
Author
Gary Aiken
Chief Investment Officer
Concord Asset Management
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Footnotes and Sources
1WSJ.com, January 2, 2026
2Investing.com, January 2, 2026
3CNBC.com, December 29, 2025
4WSJ.com, December 30, 2025
5CNBC.com, December 31, 2025
6CNBC.com, January 2, 2026
7CNBC.com, December 30, 2025
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