S&P 500 Opens 2026 on Wobbly Footing as Chip Rally Fizzles

Chip Stocks Fail to Ignite Wall Street’s First Trading Day of 2026

By Aria Montgomery | Senior Markets Correspondent

NEW YORK—The confetti had barely settled in Times Square when traders returned to their desks Monday to find the S&P 500 gasping for direction. After a record-breaking 2025, the index slipped 0.3% in the opening session of 2026, dragged lower by a sudden chill in semiconductor shares that many investors had hoped would extend last year’s tech-fueled surge.

A Familiar Story: Chips That Can’t Quite Carry the Market

By midday, the Philadelphia Semiconductor Index had shed 1.7%, erasing early gains in NVIDIA, AMD and Qualcomm. Analysts blamed profit-taking after a 68% run-up in chip names last year, compounded by fresh rumblings of tighter export controls on high-end AI chips to China.

“We’re seeing a classic ‘sell-the-news’ dynamic,” said Priya Desai, portfolio manager at Hudson Bay Capital. “Positioning was extremely long into year-end, and no one wants to be the last one holding the bag if Washington drops another regulatory shoe.”

Beneath the Calm, Rotation Hints

While megacap tech wobbled, old-economy stalwarts crept higher. Industrials and energy shares rose roughly 0.8%, paced by Caterpillar and ExxonMobil, as crude futures briefly topped $80 a barrel on cold-weather forecasts across the Northeast. The bifurcated action left the benchmark index little changed, but underscored a debate now dominating trading floors: will 2026 reward cyclicals at the expense of high-multiple growth names?

• Utilities posted their best session since October, up 1.4% as Treasury yields slid to 4.11%.
• Small-caps outperformed, with the Russell 2000 climbing 0.9%.
• Volume on the NYSE was 15% below the 20-day average, suggesting many investors are still on holiday.

What to Watch Next

All eyes now turn to Friday’s non-farm payrolls report. Consensus expects 185,000 new jobs and an unemployment rate steady at 4.2%. A softer print could revive bets on Federal Reserve rate cuts later this year, potentially re-igniting the tech trade. Conversely, a blowout number might cement the rotation into value and cyclical sectors.

Until then, traders say, expect more choppy, headline-driven sessions. “January is historically a mood-setter,” said Desai. “Right now the mood is wait-and-see.”