S&P 500 Kicks Off 2026 With a Rally, Hitting Fresh Record Highs

Wall Street’s First Gift of 2026

Traders returned from the holiday hangover to a pleasant surprise Tuesday: the S&P 500 closed at a record 5,312.07, up 0.9 percent in the year’s opening session. The broad-based index outran both the Dow and the Nasdaq, led by a late-day surge in megacap tech and a relief rally in beaten-down regional banks.

What Fueled the Move

• Apple and Microsoft added a combined $180 billion in market cap after fresh buyback announcements.
• JPMorgan’s outlook note called 2026 earnings “resilient,” nudging cyclical sectors higher.
• December ISM data showed the first manufacturing expansion in 15 months, calming recession chatter.

“The market is betting that the Fed’s last hike was truly the last,” said Priya Malhotra, senior strategist at Evercore ISI. “Liquidity is flowing back into risk assets faster than anyone expected.”

Beneath the Headlines

While the index’s 12-month forward P/E has crept to 21.4—its loftiest since 2021—bullish sentiment remains intact. Short interest on SPY, the largest S&P 500 ETF, fell to a three-year low, suggesting bears are throwing in the towel.

What to Watch Next

All eyes now turn to Friday’s payrolls print. A cooler number could cement rate-cut bets for March, whereas a blowout might revive the “higher-for-longer” chorus. Either way, the first trading day has set an optimistic tone for the 626 sessions still ahead in 2026.