The S&P 500 closed slightly higher on Friday, the first trading day of 2026, as gains in semiconductor names kept the index afloat.

The benchmark closed up 0.19% at 6,858.47, while the Nasdaq Composite fell 0.03% to finish at 23,235.63. The two had been solidly positive earlier in the day, with the S&P 500 and the tech-heavy Nasdaq trading higher by 0.7% and 1.5% at their peaks, respectively. The Dow Jones Industrial Average moved up 319.10 points, or 0.66%, to settle at 48,382.39.

Friday's gain marks a reversal from the first-day trading trend of the last few years. The S&P 500 finished lower on the first day of trading for each of the last three years. Going back to the 1950s, there is no discernible trend, with the first day finishing positive about 48% of the time, according to Bespoke Investment Group.

Key chip stocks such as Nvidia and Micron Technology climbed in the session. The former rose more than 1%, and the latter popped approximately 10%. Both artificial intelligence-related names were big winners in 2025 — Nvidia jumped about 39%, while Micron surged more than 240%.

But other areas in tech outside of chips suffered some losses. Notably, software stocks came under pressure, as Salesforce dropped 3% and CrowdStrike declined 4%. Palantir Technologies and Microsoft pulled back as well.

Additionally, Tesla shares were more than 2% lower after the company's fourth-quarter deliveries missed analyst estimates.

Tech was the best trade of 2025, leading the broader market to sharp gain as investors continued to pile into AI names. The S&P 500 gained more than 16% last year, marking its third straight annual advance. The Nasdaq jumped more than 20% last year, and the 30-stock Dow advanced around 13%. The three benchmarks hit record highs last year.

"We think that you will have this ongoing rotation back and forth between tech and non-tech, but that overall we'll drift higher," said Jay Hatfield, Infrastructure Capital Advisors CEO. Hatfield, who has an 8,000 year-end target for the S&P 500, said the rally will be "better balanced" as regional banks outperform and tech stocks with expensive valuations such as Tesla start to lag.

"There are themes besides tech that are very likely to work this year," he continued.

Wall Street strategists expect more gains for the U.S. stock market in 2026. The CNBC Market Strategist Survey shows the average S&P 500 target for the year is 7,629, which implies upside of 11.4%.

Friday's session had some bright spots elsewhere in the broader market. Shares of Wayfair jumped more than 8%, while RH increased roughly 6% after President Donald Trump on New Year's Eve postponed tariff increases on upholstered furniture, kitchen cabinets and vanities for a year. The order specifically delays a 30% duty on upholstered furniture and 50% levy on kitchen cabinets and vanities, keeping in place a 25% tariff on those goods that was imposed back in September.