NEW YORK, Jan 3, 2026, 13:31 ET — Market closed
U.S. industrials stocks ended the first trading day of 2026 higher on Friday, led by sharp gains in Boeing and Caterpillar that helped lift the Dow.
The Industrial Select Sector SPDR Fund (XLI) — a widely used gauge of U.S. industrials — rose nearly 2% in the last session, outpacing the broader S&P 500.
The move matters now because industrials tend to track expectations for economic growth, capital spending and interest rates, and investors are trying to set early-year positioning after a choppy finish to 2025.
It also comes as traders weigh whether the market’s recent pattern of buying pullbacks will hold up into a heavy January calendar of jobs, inflation and earnings that can reset the outlook for Federal Reserve policy.
On Friday, the Dow and S&P 500 ended higher while the Nasdaq dipped slightly, as Boeing climbed 4.9% and Caterpillar gained 4.5%, and industrials and utilities posted gains, a Reuters report said. “The market is seeing a ‘buy the dip, sell the rip’ trading mentality,” said Joe Mazzola, head of trading & derivatives strategist at Charles Schwab, referring to a strategy that buys on declines and sells into rallies. Reuters
Among industrial bellwethers, XLI closed at $157.98, up 1.9% on the day. Boeing ended at $227.77, up 4.9%, while Caterpillar finished at $598.41, up 4.4%; GE Aerospace rose 4.1% to $320.75, Deere added 0.3% to $466.80 and Honeywell edged up 0.4% to $195.88.
Friday’s strength in industrials fit a broader tilt toward “value” shares — typically cheaper stocks tied more closely to the real economy — versus “growth” names that are priced for faster expansion.
Investors also pointed to demand linked to “AI infrastructure,” shorthand for the physical buildout behind artificial intelligence such as equipment, power systems and networks that support data centers.
Treasury yields rose as markets looked ahead to next week’s run of labor data, with the 10-year yield up 3.8 basis points — a basis point is one-hundredth of a percentage point — to 4.191%, while value shares outperformed, another Reuters report said. Reuters
Industrials investors also tend to be sensitive to trade policy because many companies rely on cross-border supply chains and global demand for aircraft, machinery and factory equipment.
Before the next U.S. session opens on Monday, traders will be watching whether the sector’s early bid holds as attention shifts from year-end positioning to data and policy signals.
A busy week ahead includes the U.S. employment report due Jan. 9, the consumer price index on Jan. 13, and the start of fourth-quarter earnings season, with JPMorgan reporting Jan. 13. Fed funds futures — contracts tied to the policy rate — indicate little chance of a cut at the late-January meeting but nearly a 50% chance of a quarter-point reduction in March; a Reuters poll expects December payrolls to rise by 55,000 after a 64,000 gain in November, while the unemployment rate was 4.6%. Investors are also awaiting a U.S. Supreme Court decision on President Donald Trump’s tariffs and his choice of a new Fed chair, while analysts expect S&P 500 earnings growth to continue in 2026, a Reuters report said. Reuters
For industrials stocks, the near-term test is whether data support a “soft landing” narrative — slower inflation without a sharp economic downturn — which would typically favor capital-goods demand and rate-sensitive cyclicals. A surprise on jobs or inflation can push yields quickly, and industrials often react fast because they sit at the intersection of growth expectations, financing costs and policy risk.
