Chip stocks lead the S&P 500 before the opening of CES, easing concerns about overvaluation.

On Friday, the S&P 500 index closed slightly higher, with the rise in semiconductor stocks easing concerns about overvaluation in the market. In addition, the upcoming Consumer Electronics Show (CES) next week and signs of President Trump relaxing tariff policies boosted the market sentiment on the first trading day of the year. The S&P 500 index rose by 0.2%, with 8 out of 11 sectors posting gains, led by the energy and industrial sectors. Non-essential consumer goods, communication, and essential consumer goods sectors declined. The Nasdaq 100 index fell by 0.2%. Boosted by the rise in Asian chip manufacturers and AI-related stocks, the Philadelphia Semiconductor Index rose by 4%, marking the largest single-day gain since November 24. Flash memory stocks Micron Technology, Inc. (MU.US) and Sandisk (SNDK.US) led the S&P 500 index, with the former closing up 11% to hit a new high and the latter surging 16% at one point. However, ongoing concerns about the disruptive impact of AI led to software stocks being among the biggest decliners. Palantir Technologies (PLTR.US) stock fell by 5.6%, reaching its lowest point since December 1. Bank of America Corp strategist Savita Subramanian wrote in a report, "No sugar coating: S&P 500 index is overvalued." She mentioned that 18 out of 20 indicators show that the benchmark index is statistically overvalued, and according to multiple indicators including market cap to GDP ratio and price-to-book ratio, the index has hit new highs. She noted that while historical comparisons may have limitations due to the higher quality and lower leverage of the present S&P 500 index, she still sees many risks for the index in 2026. Ahead of the CES in Las Vegas next week, AMD (AMD.US) saw its stock rise by 4.3% on Friday. AMD CEO Lisa Su will deliver a speech on Monday night. NVIDIA Corporation (NVDA.US) also saw its stock rise by 1.3% on Friday, with CEO Jensen Huang set to make multiple appearances at the event. Wedbush Securities tech analyst Dan Ives stated that Huang is likely to focus on data centers, physical AI, and Siasun Robot & Automation technology. Tesla, Inc. (TSLA.US) saw its stock fall by 2.6% on Friday, marking the seventh consecutive trading day of decline to tie a historical record. The company's disappointing fourth-quarter deliveries, which declined by 16% year-over-year, were a factor. Analysts had previously projected a decrease of around 11% in deliveries. Earlier this week, Tesla, Inc. released its own more pessimistic average expectations, forecasting a 15% decline in deliveries. Following Trump's latest tariff actions, the stock prices of Wayfair and RH surged significantly. These actions included postponing tariffs on goods such as upholstered furniture and lowering anti-dumping duties on certain pasta products. The S&P 500 index closed approximately 1% lower at the end of 2025 compared to the historical record low set on December 24, marking four consecutive trading days of decline to end the year. Monday's trading day may present the last opportunity for a "Santa Claus rally." The trading volume on Friday was about 11% lower than the 20-day moving average. Morgan Stanley strategist Michael Cembalest wrote in his 2026 outlook report, "When the market is highly concentrated and nearing historical highs, the real question to ask is 'what could go wrong?'" He highlighted four risks: US power generation; China expanding its "technology moat" capability; and the profits resulting from the $1.3 trillion capital expenditure and R&D in super-sized data centers since 2022.