How the market kicks off the new year could set the tone for the remainder of 2026. Investors return to their trading desks next week after wrapping up the holiday season, optimistic for the new year but with some trepidation for what's to come. The S & P 500 is expected to post yet another double-digit advance in 2026 , according to strategists polled by CNBC, but there are also concerns that stocks could spend much of the year range-bound. After the massive artificial intelligence-fueled run-up of the last three years, investors are hoping corporate earnings growth can now catch up to valuations. The early days could give investors some clue as to how the rest of the year will go. The January Barometer devised in 1972 by Yale Hirsch — who popularized the old Wall Street adage, "As goes January, so goes the year" — has had an impressive track record: an 84% accuracy ratio. As a matter of fact, it bore out again in 2025, with the S & P 500 rising 2.7% in January. That was followed by three straight months of declines before the broad market index staged a major comeback, ending the year up more than 16%. .SPX 1Y mountain The S & P 500 in the past 12 months The initial read is shaky. Stocks alternated between gains and losses on Friday, the first trading day of the new year, though the S & P 500 eventually closed higher . Santa Claus — the seasonal rally that typically materializes in the last five trading days of one year, and the first two of the next — failed to show. The First Five Days are off to a rough start. And, even in the week ahead, there are major hurdles the stock market will have to get through, including developments at a major tech conference and the latest jobs report. Just this week, Bank of America strategist Savita Subramanian noted the S & P 500 has "never been more expensive" when looking at a raft of metrics she uses. She added "risks to the index abound in 2026." Nevertheless, many investors maintain that the backdrop for equities remains favorable in 2026. There's the stimulus from the One Big Beautiful Bill Act, the prospect of lower interest rates from a more dovish incoming Federal Reserve chair, and the benefits from artificial intelligence accruing to the real economy — major pillars maintaining a bullish outlook . "I expect volatility, as we always do," said Nancy Tengler, investment chief at Laffer Tengler Investments. "But I think given the early days of the AI trade, I think this bull market continues for a while." Economic outlook Nonfarm payrolls for December are set to release in the week ahead. The U.S. economy is expected to have added 65,000 jobs, according to consensus estimates from FactSet. That's slightly higher from 64,000 in the month before that . The unemployment rate is expected to have dipped slightly to 4.5% from 4.6%. Wall Street has been able to look past weakness in the labor market, given that the U.S. economy is still forecasted to expand by more than 2% in the coming year. But, if the jobs market cracks meaningfully as to dent that outlook, such as if the unemployment rate rises past 5%, that could hurt equities as well. "That will be a very clear economic warning sign," read a recent Sevens Report. "At that point, it leaves the market very vulnerable to any AI disappointment, because if AI disappointment is combined with growth worries, few (if any) sectors will be able to hold up." It can also affect the interest rate outlook, a key factor in the bull market. Fed funds futures pricing last indicated odds of two quarter point cuts coming in 2026, according to the CME FedWatch Tool . Jensen Huang takes the stage Nvidia CEO Jensen Huang will also set the tone for the new year when he takes the stage at CES 2026 , the global tech trade show running from Jan. 6-9 exhibiting what's to come in AI, robotics and wearables. Investors are hoping for more practical applications for AI in 2026 that could help justify the massive spending from companies. It's a greater concern for startups, which are leveraging debt markets to expand, as opposed to tech giants such as Alphabet, which is tapping into its massive cash hoard to improve its AI capabilities. Huang will have to strike a confident tone for investors who will be more discerning in 2026 and focusing closely on underlying fundamentals to pick their positions. "The market is now differentiating between the winners and the losers, realizing not everyone can win, not everyone can be successful," Peter Boockvar, chief investment officer at OnePoint BFG Wealth Partners, told CNBC's "Money Movers" on Wednesday. "And I think that's going to be the story of 2026." Week ahead calendar All times ET. CES 2026 running from Jan. 6-9 Monday, Jan. 5 Tuesday, Jan. 6 Wednesday, Jan. 7 8:30 a.m. U.S. International Trade in Goods and Services (November) Earnings: Constellation Brands Thursday, Jan. 8 8:30 a.m. Productivity and Costs (Q3) Friday, Jan. 9 8:30 a.m. December Jobs Report 8:30 a.m. Housing Starts (September, October) 8:30 a.m. Building Permits (September, October) 8:30 a.m. New Home Sales (September, October)
