Weekly Market Update – January 9, 2026

Quick Takes

• Major global equity indices around the world advanced in the first full trading week of the year, pushing many to all-time highs, including the S&P 500 (US large caps), the Russell 2000 (US small caps), the FTSE 100 (the UK), the Nikkei 225 (Japan), and South Korea’s KOSPI.
• Last week brought a heavy dose of US economic data releases, including several labor market reports that generally surprised to the downside. The closely watched nonfarm payrolls report showed that US employers added a lighter-than-expected 50,000 jobs in December, while October’s and November’s readings were revised down by -76,000.
• The US trade deficit unexpectedly narrowed to $29.4 billion in October, the smallest monthly deficit since 2009, while the September deficit was revised lower to $48.1 billion from $52.8 billion. The decline in the trade deficit will boost Q4 economic growth.

Source: Bloomberg. Data as of January 9, 2026.
Price Returns for Equity, Total Returns for Bonds.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.

New Year, new All-Time Highs for Stocks

Major equity indices around the world advanced in the first full trading week of the year as investors largely looked past geopolitical escalation between the US and Venezuela, pushing most major indexes to all-time highs during the week, including the S&P 500 Index (US large caps), the Russell 2000 Index (US small caps), the FTSE 100 (the UK), the Nikkei 225 (Japan), and South Korea’s KOSPI. In the US, small-cap and value equities outpaced the large-cap growth stocks that have led returns in recent years. Of the major indexes, the Russell 2000 performed best, adding +4.6%, the technology-heavy Nasdaq Composite Index rose +1.9%, and the S&P 500 advanced +1.6%.  Each marked their best week since late November. A revival in the artificial intelligence (AI) trade and momentum in the technology sector following the annual CES event in Las Vegas, coupled with mixed but decent economic data, boosted investor sentiment and offset any mounting geopolitical tensions.

Overseas, the developed markets MSCI EAFE Index rose +1.4%, following the prior week’s +0.5% increase. The MSCI Japan Index led developed market gainers with a +2.3% gain. The MSCI Europe and MSCI UK Indexes are both now positive for seven straight weeks. In emerging markets, the MSCI Emerging Markets Index was up +1.6% following the previous two week’s gains of +2.3% and +2.1%. The MSCI Latin America Index jumped +3.7% as the US seeks to stabilize Venezuela after capturing Nicolás Maduro the previous weekend. The US Dollar Index was up +0.7% after a +.04% gain the prior week. 

Regarding US economic data, last week brought a heavy dose of releases, including several labor market reports that generally surprised to the downside. Most notably, the Labor Department released the closely watched nonfarm payrolls report on Friday, which showed that US employers added a lighter-than-expected 50,000 jobs in December, while October’s and November’s readings were revised down by a combined -76,000. However, on the more positive side, the unemployment rate ticked down to 4.4% from a downwardly revised 4.5% in the prior month.  On Wednesday, the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) for November provided another sign of cooling in the US labor market. According to the report, hires declined to 5.1 million for the month, down from 5.4 million in October, while job openings dropped to the lowest level since September 2024 at 7.1 million. The labor data, which suggest a tepid (but not weakening) labor market, is likely to keep the US Federal Reserve sidelined when it meets late this month. Markets expect the Fed’s next move to be a rate cut in mid-2026.

Data from the Institute for Supply Management (ISM) showed that economic activity in the US manufacturing sector contracted for the 10th consecutive month in December to its lowest level in 14 months. On the other hand, the ISM’s measure of services sector activity expanded for the tenth month in a row and reached a 14-month high. Price pressures also eased somewhat, but still remain solidly in expansion territory.   

The US trade deficit unexpectedly narrowed to $29.4 billion in October, the smallest monthly deficit since 2009, while the September deficit was revised lower to $48.1 billion from $52.8 billion. The decline in the trade deficit will boost Q4 economic growth. 

The preliminary University of Michigan Consumer Sentiment reading for January increased to 54.0 from the final reading of 52.9 for December. Both the Current Economic Conditions component and the Consumer Expectations component improved.

In the bond market, US Treasuries rallied early last week in response to some weaker-than-expected economic data, but trading activity was relatively muted. For the week, the 10-year and 30-year US Treasury yields were down -3 and -6 basis points, respectively, to 4.17% and 4.81%, while the 2-year US Treasury yield was up +6 basis point to 3.53%. Meanwhile, municipal bonds delivered gains and outperformed Treasuries, while investment-grade corporate bonds also posted positive returns amid heavy issuance that was met with solid demand. (Bond prices and yields move in opposite directions.) President Trump announced that he was instructing government-controlled mortgage companies Fannie Mae and Freddie Mac to buy $200 billion of mortgage bonds to help drive down lending rates. Credit spreads in the agency mortgage-backed (ABS) sector rapidly tightened on the news. Overall, the Bloomberg US Aggregate Bond Index returned +0.4%, following the prior week’s -0.2% return. Non-US bonds, as measured by the Bloomberg Global Aggregate ex US Bond Index, were down -0.3% following a -0.2% return the prior week.

Chart of the Week

According to the US Census Bureau, the US Trade Deficit for October unexpectedly shrank to just -$29.4 billion from -$48.1 billion in September (revised from -$52.8 billion). That was far better than the -$58.7 billion deficit expected and marks the smallest trade deficit since June 2009. Like much other recent economic data, the trade figures were delayed by last fall’s government shutdown. Smaller trade deficits help contribute to economic growth, while larger deficits inhibit growth. This significant reduction was primarily attributed to another notable increase in Exports, which increased +2.6% to $302 billion, the highest level on record. Exports of consumer goods decreased -$1.0 billion. Imports of consumer goods decreased -$14.0 billion, with pharmaceutical preparations down -$14.3billion. Adjusted for inflation, real goods deficit decreased -$15.6 billion, or -19.8%, to -$63.1 billion. A key takeaway from the report is that the nearly 40% plunge in the headline deficit clearly has something to do with the introduction of higher tariff rates that have detracted from import demand.

US Trade Deficit Unexpectedly Falls to Lowest Level Since June 2009

US Pending Home Sales Index (Seasonally Adjusted)

Source: US Census Bureau, Bloomberg.

The Week Ahead

There are no major economic reports on Monday and Tuesday’s Consumer Price Index (CPI) for December will likely be the highlight of the week as investors continue to gauge the likely timing and extent of further interest-rate cuts by the Federal Reserve. The Producer Price Index (PPI) report for November on Wednesday will give an indication of wholesale inflationary pressures, and Import & Export Prices come on Thursday. November Retail Sales figures on the same day will tell investors how consumer spending is holding up. Housing data will be prevalent, with October New Home Sales on Tuesday, weekly MBA Mortgage Applications and December Existing Home Sales on Wednesday, and the NAHB Housing Market Index (homebuilder confidence) on Friday. Other data includes the December Federal Budget Balance on Tuesday, the third quarter Current Account Balance on Wednesday, weekly Jobless Claims numbers on Thursday, and Industrial Production for December on Friday. 

Fourth Quarter Earnings Season kicks off this week as the big banks report their results beginning with JPMorgan Chase on Tuesday, followed by Bank of America, Citigroup, and Wells Fargo on Wednesday. Goldman Sachs and Morgan Stanley announce their earnings on Thursday, while PNC Financial Services rounds out the week on Friday.

Did You Know?

REVERSAL YEARS – After falling more than -15% year-to-date in April, the S&P 500 finished 2025 with a gain of +17%. The only other years since World War II that the S&P 500 finished the year up more than +15% after trading down as much as -15% year-to-date were 2009 and 2020. In 2010, the index added another +12.8%, while in 2021, it rallied +26.9%. (Source: Bespoke)

NOT YOUR PARENTS’ S&P 500 – Only 188 stocks in the S&P 500 today were also in the index at the end of 1999. Six of the largest 25 index members at the end of 1999 are no longer in the index at all today, and only six — Microsoft, Walmart, Exxon Mobil, Oracle, Home Depot, and Johnson & Johnson — still rank in the top 25. (Source: Bloomberg)

INDEX > STOCKS – The S&P 500 posted a total return of +17.9% in 2025, but the average stock in the index gained +14%. Just 31% of S&P 500 stocks outperformed the index in 2025. Stocks ending the year with market caps above $100 billion gained an average of +31% in 2025, versus an average gain of +9.5% for sub-$100 billion companies. (Source: Bespoke)

This Week in History

INITIAL INSIDER TRADING – On January 9, 1790, Congress learned about insider trading. Treasury Secretary Alexander Hamilton proposed buying up distressed bonds trading at a fraction of their value to consolidate the national debt. Several members of Congress hired sailboats and stagecoaches to take them south faster than the news could travel by foot so they could buy up bonds cheaply. (Source: The Wall Street Journal)

Economic Review

• Job creation cooled in December as Nonfarm Payrolls increased by +50,000 for the month, below expectations for +70,000 new payrolls. The November nonfarm payrolls were revised down to 56,000 from the originally reported +64,0000, and October payrolls were revised down to -173,000 from -105,0000. Restaurant and bar jobs led the month, rising +27,000, while health care added +21,000, and social assistance increased by +17,000. Retail reported a decline of -25,000, and Government added just +2,000 jobs for the month. All told, employers added 584,000 new jobs in 2025—or about 49,000 jobs a month, on average. That is a marked deceleration from 2024, when the economy added two million jobs at a pace of 168,000 a month. The Unemployment Rate slipped to +4.4% from +4.5% in November, which was revised down from +4.6%. Labor-Force Participation was down a tick to 62.4% versus 62.5% the prior month. The employment-population ratio increased to 59.7% from 59.6% in November. Average Hourly Earnings (AHE) increased +0.3% for the month, in line with expectations, and up from +0.2%. On an annual basis, AHE were up +3.8%, up from +3.6% the previous month, where they were expected to remain. The Fed would like to see wage growth slow to around +3% annually or less, a level it sees as consistent with low inflation. Average Weekly Hours Worked were 34.2 hours, down a tick from 34.3 the prior month. November private sector payrolls increased by +37,000, down from 50,000 the month before after being revised down from +69,000, and well short of expectations for +75,000.  The bottom line is that payrolls came in well short of expectations, and prior months were revised lower, but that was tempered by the decline in the unemployment rate.
• The preliminary reading of the January University of Michigan Consumer Sentiment Index increased to 54.0, from a final reading of 52.9 the prior month, and beating expectations to come in at 53.5. In the same period a year ago, the index stood at 71.7. The Current Economic Conditions component rose to 52.4 from the prior month. The Consumer Expectations component improved to 55.0 from 54.6 the prior month. One-year inflation expectations was unchanged at 4.2%, a tick under expectations to come in at 4.1%. The five-year inflation expectations was 3.4%, up from 3.2% the prior month. 
• The ISM Services PMI jumped to 54.4% in December, the best reading since October 2024, and is the third straight month of expansion. That was up from an unrevised 52.6% the prior month, which easily exceeded expectations for a 52.2% reading. Service-oriented companies, such as restaurants and retailers, employ the majority of Americans. The New Orders popped to 57.9% from 52.9% the prior month, and the Production component rose to 56.0% from 54.5%. The Employment component improved to 52.0% from 48.9%. The Supplier Deliveries index decreased to 51.8% from 54.1%, and the Backlog of Orders component dropped to 42.6% from 49.1%. The Prices index fell to 64.3% after sinking -4.6 points to 65.4% the prior month. Overall, the report showed an acceleration in growth for the key service sector portion of the US economy, including the first Employment reading in expansion territory since May 2025. 
• The Institute for Supply Management’s (ISM) Manufacturing PMI fell to 47.9% in December from an unrevised 48.2% in November. That was far short of Wall Street consensus expectations for it to rise to 48.4%, and marks the tenth consecutive month it has been below the 50.0% dividing line between economic expansion (above 50%) and contraction (below 50%) and is the lowest reading in 14 months. The details were mixed, as the index of New Orders, a sign of future demand, improved slightly to 47.7% from 47.4% in the previous month. The Employment index rose to 44.9% from 44.0%. Additionally, the Backlog of Orders index increased to 45.8% from 44.0%, the Supplier Deliveries index jumped to 50.8% from 49.3%, and the New Export Orders index inched up to 46.8% from 46.2%. However, the Production component slipped slightly to 51.0% from 51.4%. The Prices index, a measure of inflation, was unchanged at 58.5%. The key takeaway from the report is that despite modest improvements in several of the manufacturing sector components, it remained in a state of contraction for the tenth consecutive month.
• The S&P Global US Services PMI weakened in December to 52.5 from 54.1 in November but still marked 35 months above the key 50.0 expansion level. That was below the flash estimate of 52.9 two weeks ago, down from 56.8 a year ago, and is the lowest reading since April 2025. A slower rise in business activity reflected weaker growth in new orders as employment growth slowed from a softer outlook. Meanwhile, input costs and selling prices increased sharply. New Orders rose at the slowest pace in 20 months (since April 2024) falling to 50.8 from 53.9 in November, but importantly still in expansionary territory for a 20th straight month. Employment growth fell as the outlook softened, with the index down to 49.9 from 52.1 the prior month, ending eight months of expansion. Input Costs accelerated during December to a seven-month high and remained well above its historical trend level. Service companies continued to report that costs were being driven higher by tariffs, a general increase in supplier charges, as well as by labor-related expenses. Higher input prices fed through to an increase in Selling Prices over the month. Overall, the rate of inflation picked up to its highest level since August. Business Confidence was again positive in December, but softened a bit from November.
• The Job Openings Labor Turnover Survey (JOLTS) showed that Job Openings fell well short of Wall Street estimates. According to Bureau of Labor Statistics data, job openings were just 7.146 million in November, versus 7.449 million the prior month (revised lower from 7.670 million). The median estimate in a Bloomberg survey of economists called for 7.648 million openings. The Number of People Quitting Jobs was 3.161 million, up from 2.973 million the prior month (revised up from 2.947 million). The record was 4.5 million job quitters in late 2021. The Hiring Rate ticked down to 3.2% from 3.4%. The hiring rate typically ranges from 3.7% to 4.0% in a strong economy. The Quits Rate ticked down to 2.0% from 1.9% the prior month (revised up from 1.8%). People tend to quit less often when the economy softens and jobs become harder to find. The Layoffs Rate was up a tick lower at 1.1% from 1.2% the previous month, and below the 1.4% annual average from 2010 to 2019.
• Outstanding US Consumer Credit increased by +$4.229 billion in November, well below expectations for a +$10.082 billion increase, and down sharply from $9.236 billion the prior month (revised up from the initially reported +$9.178 billion). That amounts to a +1.0% annual growth rate, down from the +2.2% annualized growth rate the prior month. Growth for revolving credit, such as credit cards, fell -1.9% for the month, after rising +4.9% the previous month. Nonrevolving credit, which tends to be much less volatile than revolving credit and includes auto as well as school loans, rose at a +2.0% rate following the prior month’s +1.2% increase. The data from the Federal Reserve is not adjusted for inflation and does not include mortgage loans, which is the largest category of household debt.
• The Commerce Department reported that Factory Orders fell -1.3% in October, just below expectations for a -1.2% decline, and down from +0.2% the prior month (unrevised). Factory Orders Excluding Transportation were down -0.2%, down from +0.1% the prior month after being revised down from +0.2%. Durable Goods Orders for long-lasting items such as televisions, appliances, and transportation equipment fell -2.2%, in line with expectations from where they were in the advance report. That was down from a +0.6% drop in September. Durable Goods Orders Ex Transportation were down -0.2%. The important Core Capital Goods Orders (capital goods excluding volatile sectors like transportation and defense), a proxy for business spending, was up +0.5%, unchanged from the advance reading, following a +1.0% rise the prior month. Core Capital Goods Shipments, which are factored into GDP, were also up +0.8%, up from the prior month’s +0.1% reading. The inventory-to-shipments ratio was unchanged at 1.56 for the fourth month in a row.
• October Housing Starts decreased -4.6% month-over-month to a seasonally adjusted annual rate of 1.246 million units, missing expectations for a +1.8% increase to 1.330 million units. That compares to a +1.2% rise, or 1.306 million units from the prior month (revised higher from 1.428 million units). Single-unit starts were up +5.4%, compared to a -4.6% decrease the prior month. Multi-family units sank -22.0% after a +13.0% rise the prior month. Housing starts peaked at 1.8 million in April 2022. Regionally, new construction single-unit starts were down -21.4% in the West, but up +44.2% in the Northeast, +22.6% in the Midwest, and up +8.2% in the South. Moving to Building Permits, one of the leading indicators tracked by the Conference Board and indicator of future construction activity, fell -0.2% to an annualized rate of 1.412 million units. That was above expectations for 1.350 million units and compared to the prior month’s unrevised +1.2% increase to 1.415 million units. Single-unit permits fell -0.5%, while multi-family units were up +0.2%. Regionally, single-unit permits fell -5.3% in the Midwest and -0.6% in the South, but rose +3.4% in the Northeast and +2.2% in the West. The bottom line is that the weakness in starts was driven entirely by multi-family units, whereas single-unit starts were up +5.4% month-over-month and at their highest level since July.
• Weekly MBA Mortgage Applications slipped -0.3% for the week ending January 2, after falling -10.0% the prior week. The Purchase Index fell -6.2% after declining -0.06% the prior week. The Refinance Index rose +7.4% after dropping -19.6% the prior week. The average 30-Year Mortgage Rate fell to 6.25% from 6.32% the prior week. This is the lowest level since 6.1% for the week of September 27, 2025.
• Weekly Initial Jobless Claims rose +8,000 to 208,000 for the week ending January 2, better than expectations for 212,0000. The prior week was revised higher to 200,000 from 199,000. The number of people already collecting unemployment claims (i.e., Continuing Claims) rose +56,000 to 1,914,000 for the week ending December 26, which was worse than expectations for 1,900,000. The prior week’s reading was revised lower to 1,858,000 from 1,866,000.

Asset Class Performance

Source: Bloomberg.
Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange-traded funds recommended by The Retirement Planning Group. The performance of those funds may be substantially different from the performance of the broad asset classes and to proxy ETFs represented here. US Bonds (iShares Core US Aggregate Bond ETF); High‐Yield Bond (iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (Vanguard Total International Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 Value ETF); Mid Growth (iShares Russell Mid-Cap Growth ETF); Mid Value (iShares Russell Mid-Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares US Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by 24% US Bonds, 10% International Bonds, 6% High Yield Bonds, 13.8% Large Growth, 13.8% Large Value, 3.6% Mid Growth, 3.6% Mid Value, 1.2% Small Growth, 1.2% Small Value, 16.8% International Stock, 4.2% Emerging Markets, 1.8% Real Estate.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.