It was a close call this week for equity markets but they ended only slightly lower. Inflation measures and continued growth will battle it out in 2026 to determine which one comes out on top.
Monday
S&P 500 0.00% | NASDAQ 0.00%
Markets Closed.
Tuesday
S&P 500 2.06% | NASDAQ 2.39%
The rhetoric surrounding Greenland and potential tariffs sparked a selloff for markets. Metal purchases continued as gold prices shot up. Tariff uncertainty has sparked similar selling activity in the past year although past trends don’t necessarily predict future performance.
Wednesday
S&P 500 1.16% | NASDAQ 1.18%
Markets regained some ground mid-week as temperatures cooled on the international stage. All major sectors rose and Small-cap stocks outperformed. The 2-year treasury remained stable while the 10-year edged lower.
Thursday
S&P 500 0.55% | NASDAQ 0.91%
Markets climbed on the back of positive Q3 GDP figures (4.4%). The inflation data for November was also released at a still elevated level but nothing that surprised the economic community. The case for a hawkish leaning Federal Reserve will keep borrowing rates unchanged in the near-term. This is, of course, data dependent as we continue into the third quarter.
Friday
S&P 500 0.03% | NASDAQ 0.28%
A holiday-shortened week resulted in a quiet Friday for trading. Nevertheless, broad indexes could not dig out of the hole from Tuesday. Investors are now looking to next week’s Federal Reserve meeting and interest rate decision. Labor data will also be released giving an indication of job-strength so far in the New Year.
Conclusion
S&P 500 0.35% | NASDAQ 0.06%
As previously noted, the holiday-shortened trading week was full of its share of volatility on risks abroad. Markets were quiet in relation to earnings season which will change in the coming week, but inflation data was notable. The efforts to get inflation to a 2% target (currently at 2.8% per the PCE Index), continue. The inflation data from year-end 2025 will trickle in and attention will focus on consumer spending and earnings this quarter. The Federal Reserve convenes next week for the first meeting of the year (8 total each year). The policy direction will likely remain unchanged but, as the Federal Reserve has maintained, they will be data dependent. With a stable interest rate environment value stocks have outperformed so far this year. Growth stocks have experienced increased selling year-to-date. Leadership for equities could shift depending on announcements from companies during this upcoming earnings season. The headlines will be closely watching U.S. policy as well as performance in non-tech asset classes in 2026. This is not representative of trading in client’s accounts currently or direction of markets. Investors are assessing what opportunities provide the best value and, furthermore, the best yield after a profitable 2025.
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