Here is Schwab's early look at the markets for Monday, January 5.
A note: After we recorded Friday evening, news broke of U.S. military action against Venezuela and the arrest of its president, Nicolas Maduro. Amid the resulting uncertainty, Wall Street might experience more volatile trading today and early this week. Also, crude oil prices—which finished Friday near one-year lows—might get choppy. For the latest updates, tune in to the Schwab Network, which begins broadcasting at 8 a.m. Eastern Time, or refer to the Schwab Market Update daily newsletter, which will be published before the open on Schwab.com.
Looking beyond Venezuela to the rest of the week, a host jobs data awaits participants back from the holidays. Job openings and ADP employment get the parade started Wednesday and the highlight is Friday's December nonfarm payrolls report. Stocks struggled in the shortened holiday week and today is traditionally the final day of the "Santa Claus rally" period that didn't deliver much of a boost this year.
Earnings remain sparse before fourth-quarter reporting season starts with big banks a little over a week from now. The largest U.S. banks quietly enjoyed an impressive fourth quarter of stock market performance, as S&P financials led all sectors in performance during the final month of 2025 with gains of nearly 3%.
Soon after today's open, investors receive December's ISM Manufacturing PMI. This report has been gloomy over the last year and fell to 48.2% for November. That's well below the 50% needed for expansion. In fact, the index hasn't had an expansion month in nearly a year despite the Trump administration's efforts to bring manufacturing back home.
Analysts don't expect much change in December, with estimates below 49%. This could reflect light new orders seen in the November report. Other items to monitor in the data are prices paid, which inched up to 58.5% in November, and employment, which fell to 44.0%. That's a combination that suggests "stagflation" in the manufacturing sector, Briefing.com noted when November's data arrived.
A strong or weak jobs report Friday could play into the Fed's thinking for 2026. Analysts now think the U.S. economy added around 65,000 jobs in December, according to FactSet. November saw 64,000 new jobs, but data were wobbly due to the government shutdown and it wouldn't be surprising to see revisions. If the soft jobs data that started in mid-2025 continues, it might give the Fed more ammunition to slice rates. However, weakness in the jobs market could ignite fresh worries about the U.S. economy and consumer spending, typically not bullish for stocks even if rate cut odds rise.
Another item to monitor in coming days is CES 2026, a global trade tech show that starts tomorrow focusing on robotics, AI, and wearables. The show features an address by Jensen Huang, CEO of Nvidia. Huang holds a press conference there early this afternoon.
Stocks struggled the last five sessions since record highs the day after Christmas, and the S&P 500 index ended up lower for December--its first monthly drop since April. Technically, the S&P 500 remains in a range with its upper end near all-time closing highs of around 6,930. Participants haven't shown much buying enthusiasm at levels above 6,900 since the index first arrived there in late October. However, a strong earnings season might help sentiment. Lack of catalysts and concerns about valuations in the tech sector kept the market treading water the last two months.
There's also concern about what's ahead. Though earnings could unleash some animal spirits if they're positive, Supreme Court decisions on tariffs and President Trump's attempted firing of Fed Governor Lisa Cook loom as soon as this month. Each could ignite volatility, especially if the Court rules in the administration's favor.
Support-wise, the 50-day moving average now rests just above 6,800 for the S&P 500 index. That moving average has generally held up over the last few months despite a couple of tests below it.
One wild card is the jobs market. Futures trading still anticipates two to three rate cuts this year, but a recovery on the jobs side might sap the Federal Reserve's enthusiasm about any cuts at all. Several policy makers said at the December meeting that they had tilted between cutting and pausing that month, and some seem prepared to wait a while and see how the economy performs now that it's had three rate cuts since September.
The futures market priced in 17% odds of a January rate cut as of late Friday, according to the CME FedWatch Tool.
Another wild card is Treasury yields, which climbed five basis points last week to 4.19% for the 10-year note. That's near recent highs and could hurt rate-sensitive small caps, home builders, and dividend payers.
U.S. crude oil futures fell below $57 a barrel at times Friday, near the low end of their recent range, as Reuters reported that OPEC and its allies would likely keep production unchanged at their meeting this weekend. Crude had its largest annual drop since 2020 last year, falling nearly 20%.
Silver futures climbed 1% Friday to quietly wrap up a wild week for metals trading.
Friday's first trading day of 2026 resembled 2025 in at least one way, as semiconductor stocks outpaced software stocks. This trend goes back a while and reflects worries that AI might hurt demand for software tools. Shares of Adobe and Salesforce fell 4% and 3%, respectively, by late Friday, though there wasn't any major sector-specific or company-specific news.
Chip stocks traveled in a different direction, rising about 4% as a sector and led by some of the same familiar names that keyed last year's rally including Micron, Western Digital, Taiwan Semiconductor Manufacturing, Intel, and Advanced Micro Devices. Nvidia also rose, but only 1% and far behind the leaders, remaining 10% beneath October's all-time highs.
The chip rally Friday got sparked by a 15% gain for Chinese tech firm Baidu after its AI chip unit filed an application to list on the Hong Kong stock exchange, Barron's reported. This news eased concerns about possible slowing demand for chips to power data centers, though earnings and guidance later this month from big players like Meta Platforms and Amazon are yet to come.
Overall, the S&P 500 index managed to avoid a five-session losing streak, rising late in Friday after falling earlier. The Nasdaq Composite, however, fell fractionally and is down five sessions in a row. Small caps and the Dow Jones Industrial Average performed well Friday.
Sector-wise, energy led with 2% gains Friday despite a drop in crude oil prices as investors awaited OPEC's weekend production decision. Continued geopolitical tension in Venezuela and Ukraine might be giving energy companies a lift. Several of the major oil firms rose 3% or more Friday. Market breadth improved Friday despite the light index gains, with eight of 11 sectors up. Consumer discretionary weakened under pressure from Tesla.
Individual trading on Friday outside of tech saw home builders like Lennar and KB Home rise despite the climb in Treasury yields. Caterpillar rose more than 4.5% and Boeing also climbed 4% amid strength in the industrial sector. Caterpillar is seen as a play on strength in mining due to being a supplier of mining equipment, Briefing.com pointed out. Boeing got a boost from news earlier this week that it had been awarded a $2.7 billion Army contract. Defense contractors Northrop Grumman and Lockheed Martin also rose 2% or more Friday.
Tesla fell about 2% Friday after reporting fourth quarter vehicle deliveries of 418,227. Consensus was for deliveries of around 422,000 vehicles, down from 497,000 in the third quarter and 496,000 in the fourth quarter of 2024.
Wayfair and RH rose more than 6% and 9%, respectively, after the Trump administration announced it would delay an increase in furniture tariffs for a year.
Rivian fell more than 1% Friday after reporting it produced 42,284 vehicles and delivered 42,247 in 2025, both in line with the company's expectations.
The Dow Jones Industrial Average® ($DJI) gained 319.10 points Friday (+0.66%) to 48,382.39 ; the S&P 500 index (SPX) rose 12.97 points (+0.19%) to 6,858.47, and the Nasdaq Composite® ($COMP) lost 6.36 points (-0.03%) to 23,235.63.
For the week, the DJIA fell 0.67%, the S&P 500 dropped 1.03%, and the Nasdaq slid 1.52%.