Financial and industrial names like Goldman Sachs Group Inc. (GS) and Caterpillar Inc. (CAT) are helping the Dow Jones Industrial Average have its best start to the new year since 2018.According to early data from Dow Jones Market Data, the blue-chip gauge was up 1.9% through the first four trading days of the year as of Wednesday’s close. Despite a decline that saw the Dow DJIA drop 466 points, or 0.9%, to close at 48,996.08 on Wednesday, it represents its best four-day start in eight years. During the first four trading days of 2018, the Dow increased by 2.3%.Since late 2025, when doubts began to surface regarding the potential of certain Big Tech businesses to swiftly monetize their enormous investments in developing artificial intelligence technologies, investors have begun shifting their focus to more cyclical and value-oriented industries.
Due to this, the Dow has recently outperformed the S&P 500 and Nasdaq Composite.
On Wednesday, that tendency abruptly reversed, with the Nasdaq COMP outperforming the Dow and the S&P 500 SPX declining less than the blue-chip index. With gains of 1.1% and 1.5%, respectively, the S&P 500 and Nasdaq Composite have recorded their best four-day openings to the new year since 2023 and 2019.
Baird Private Wealth Management’s Ross Mayfield, an investment strategist headquartered in Kentucky, stated that “the trend we saw at the end of 2025 was more strength in cyclical stocks and sectors, like financials and industrials.” “That strength is continuing into the new year and helping to boost less tech-centric indexes like the Dow.”
The Dow began trading close to 49,576 on Wednesday after ending Tuesday’s session at an all-time closing high of 49,462.08. This came after payroll processor ADP revealed that the private sector had added 41,000 jobs in December, reversing a loss of 29,000 from November.
The blue-chip index then lost momentum throughout Wednesday’s session as investors balanced the possibility of a quarter-point interest rate drop by the Federal Reserve later this month against a better-than-expected services-sector PMI rating for December.
Additionally, they evaluated the worldwide threats posed by the Trump administration’s tough rhetoric against Cuba, Greenland, and Colombia as well as the U.S. participation in Venezuela.
The stock market has not been alarmed by U.S. military operations in Venezuela over the weekend that resulted in the capture of leader Nicolás Maduro. According to Mark Malek, chief investment officer at Siebert Financial in New York, the Cboe Volatility Index VIX, a measure of expectations for near-term volatility expressed by S&P 500 Index option prices, is currently at about 15, indicating either extreme bullishness or complacency among investors.
The Dow’s early 2026 increase was attributed by senior portfolio manager Keith Buchanan of Globalt Investments in Atlanta to pent-up demand for stocks after investors’ tax-related losses at the end of 2025.
In a phone interview, Buchanan stated, “We feel there might have been tax-loss harvesting occurring and now that this is behind us, we see some pent-up buying.”
The market seems to be supported by expectations of robust economic growth in 2026. In terms of the economic outlook, “there’s a quarter of growth that should land somewhere north of 3% from a real GDP standpoint in the U.S. and some of that is obviously momentum that could continue into 2026,” he stated. From an earnings perspective, the market is expecting growth and some of this economic momentum. The threshold for earnings growth is somewhat low in a stable market.
Expectations of a few Fed rate cuts in 2026 as well as continuous fiscal stimulus are added to this mix, he said.
“All of this comes together to create a market that is not screaming that it is at a top or triggering us, in our shop, to be bailing out of equities wholesale,” Buchanan stated.
