Stocks Begin 2026 With a Shrug After 2025’s Final-Quarter Slide
After December’s rout, markets open 2026 flat as investors weigh resilient 2025 gains against a fresh wall of worries.
A Quiet Opening Bell
NEW YORK—When the first trade of 2026 flickered across the board at 9:30 a.m. Tuesday, the silence on the floor of the New York Stock Exchange felt louder than the opening bell. After a bruising December that shaved 7 % off the S&P 500, investors greeted the new year with the enthusiasm of a Monday morning alarm clock: obligatory, not optimistic.
From Euphoria to Earnings Warnings
It was only six months ago that the same index notched its 37th record close of 2025, powered by AI mania and a resilient labor market. Yet earnings warnings from Big Tech darlings—coupled with a sudden spike in long-term bond yields—flipped the script faster than you can say “soft landing.”
“Markets climbed a wall of worry all year, then discovered the edge was made of glass,” said Priya Malhotra, senior strategist at Atlas Capital.
The Numbers That Matter
- S&P 500: down 6.8 % since the December peak, but still up 11.2 % for calendar-year 2025.
- Nasdaq 100: off 9.4 % from its high, though boasting a 14.7 % annual gain.
- CBOE VIX: closed above 24 for eight straight sessions, the longest stretch since October 2020.
What Traders Are Watching Now
Futures traders have priced in a 68 % chance the Federal Reserve will stand pat at its January meeting, according to CME’s FedWatch tool. All eyes turn to Friday’s non-farm payrolls; a print above 250 k could cement the “higher-for-longer” narrative, while a sub-150 k surprise might revive rate-cut bets.
Main Street’s Mood
Outside the brokerage towers, the mood is more cautious than fearful. “We’re not selling, but we’re not adding either,” said Luis Ortega, 42, who manages a Denver plumbing-supply firm and holds a diversified ETF portfolio. “Last year’s gains paid for my daughter’s first semester; now I just want to keep what we made.”
Looking Ahead
History offers cold comfort: since 1950, January’s direction has predicted the full-year outcome roughly two-thirds of the time. Yet 2026 arrives with crosswinds—tight credit conditions, a strong dollar pressuring exporters, and an earnings-growth estimate that has already been trimmed from 9 % to 4 % in six weeks.
Still, bulls note that corporate balance sheets remain sturdy, with cash sitting at record highs. “Volatility is the price of admission,” quipped Malhotra. “The show isn’t over; the next act just hasn’t started.”