BY COMFORT OGBONNA
The S&P 500 surged to a record closing high on Friday, buoyed by strong gains in chipmakers led by Broadcom, as investors looked past a weaker-than-expected U.S. jobs report and maintained confidence that the Federal Reserve will cut interest rates later this year.
All three of Wall Street’s major indexes posted solid gains during the first full trading week of 2026, supported by advances in materials, industrials and other sectors that have lagged technology stocks in recent years. The broader market strength reflected a rotation by investors into a wider range of industries, even as technology remained a key driver of overall performance.
A Labor Department report showed U.S. employment growth slowed more than expected in December, easing concerns that the economy may be overheating. At the same time, the unemployment rate edged down to 4.4%, signaling that the labor market remains resilient and is not deteriorating rapidly. The mixed data did little to change market expectations that the Federal Reserve could begin easing monetary policy later this year.
Chip stocks stood out as one of the session’s strongest performers. The PHLX Semiconductor Index jumped 2.7% to a record high, reflecting optimism around artificial intelligence, data center demand and longer-term growth prospects for the sector. Lam Research soared 8.7% to $218.36 after Mizuho raised its price target on the chip equipment maker, citing improving industry fundamentals.
Broadcom climbed 3.8%, while Alphabet added 1% and Tesla advanced 2.1%, all helping to lift both the S&P 500 and the Nasdaq. Intel surged nearly 11% after President Donald Trump said he had a “great meeting” with the chipmaker’s chief executive officer, Lip-Bu Tan, fueling speculation about potential policy support or strategic initiatives tied to domestic semiconductor production.
Beyond technology, Vistra jumped 10.5% after Meta Platforms agreed to purchase power from the company’s nuclear plants, highlighting growing demand for reliable energy sources to support data centers and AI-driven workloads.
Investors appear to be taking a more selective approach to artificial intelligence-related stocks, focusing on companies with clearer paths to revenue growth. Zachary Hill, head of portfolio management at Horizon Investments, said the market is moving beyond broad enthusiasm toward a more detailed assessment of individual opportunities.
“On the overall AI theme, investors are getting granular and picking the winners and losers in terms of sub-themes and individual names,” Hill said. “We view that as a more positive development. It means we’re getting closer to the monetization phase, where investors can see tangible revenue enhancements from this technology.”
By the close, the S&P 500 rose 0.65% to finish at 6,966.28 points. The Nasdaq gained 0.82% to 23,671.35, while the Dow Jones Industrial Average advanced 0.48% to 49,504.07. Nine of the S&P 500’s 11 sectors ended higher, led by materials, which climbed 1.8%, followed by utilities, up 1.24%.
For the week, the S&P 500 added 1.6%, the Nasdaq rose 1.9% and the Dow outperformed with a 2.3% gain. Value stocks continued to show relative strength, with the S&P 500 value index up about 2% so far in 2026, compared with a roughly 1% gain in the growth index, signaling a shift toward previously underperforming areas of the market.
Valuations remain elevated heading into the fourth-quarter earnings season. The S&P 500 is trading at roughly 22 times expected earnings, down from about 23 in November but still above its five-year average of 19, according to market data.
Uncertainty lingered on the policy front after the U.S. Supreme Court said it would not issue a ruling on Friday regarding the legality of President Trump’s sweeping tariffs. Investors are awaiting clarity, with traders warning that a decision to strike down the tariffs could trigger heightened volatility across financial markets.
Housing-related stocks rallied after Trump said he was directing his representatives to purchase $200 billion in mortgage bonds in an effort to lower housing costs. LoanDepot surged 19.3%, Rocket Companies gained 9.6% and Opendoor Technologies jumped 13.1%. The Philadelphia Housing Index rose 5.7% to its highest level since October.
Not all stocks participated in the rally. General Motors fell more than 2% after the automaker said it would take a $6 billion charge to unwind certain electric-vehicle investments, underscoring ongoing challenges in the EV sector.
Market breadth was positive, with advancing stocks outnumbering decliners on the S&P 500 by a ratio of 1.3 to one. The index recorded 48 new highs and six new lows, while the Nasdaq posted 140 new highs and 62 new lows. Trading volume was relatively heavy, with about 17.0 billion shares changing hands on U.S. exchanges, compared with a 20-session average of 16.4 billion shares.
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