Weekly Market Update – January 23, 2026

Quick Takes

• A holiday-shortened trading week turned into a roller coaster on Wall Street, as renewed geopolitical tensions and sharp earnings-driven stock moves left major indexes slightly lower after rebounding from midweek lows.
• Like the stock market, the bond market saw some volatility but ultimately ended flat for the week. Concerns about fiscal developments abroad—specifically in Japan—helped push global yields higher early in the week, and then they eased as the week progressed.
• The U.S. economy expanded more than originally estimated in the third quarter as the third and final estimate of real Gross Domestic Product for Q3 2025 was revised higher to +4.4% from the previous estimate of +4.3% on December 23.

Source: Bloomberg. Data as of January 23, 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.

Markets Little Changed Amid Tariff Drama and Mixed Earnings

A holiday-shortened trading week turned into a roller coaster on Wall Street, as renewed geopolitical tensions and sharp earnings-driven stock moves left major indexes slightly lower. While markets rebounded from midweek lows, most indexes finished just barely in the red. 

US Stocks Were Whipsawed by Greenland Tariff Threats and Mixed Earnings Reports

US markets reopened Tuesday after the Martin Luther King Jr. Day holiday—and almost immediately ran into trouble. Major indexes dropped sharply to start the week after the White House said it would impose new tariffs on European nations that opposed the US purchasing or taking control of Greenland. The S&P 500 Index posted its biggest one-day decline since early October, and stocks, bond prices, and the US dollar all fell together—an unusually synchronized move that underscored investor anxiety. However, by Wednesday, markets swung in the opposite direction after the Trump administration signaled a softer stance. A social media post by President Trump indicated that he and NATO had “formed the framework of a future deal with respect to Greenland,” and tariff plans were put on hold. That reversal fueled a strong rebound that helped indexes recover from their steep Tuesday decline.

By week’s end, the major averages saw little changes, though slightly negative. The S&P 500 finished down -0.4% for the second straight week, and the small-cap Russell 2000 Index dipped -0.3% after last week’s market-leading +2.0% gain. This week, the technology-heavy Nasdaq Composite Index led major US equity indexes for the week but still slipped -0.1%. The S&P 500 now sits just 0.88% below its all-time high from January 12. The Russell 2000 had just established its most recent all-time high on Thursday (January 22) but fell -1.8% on Friday. Meanwhile, the Nasdaq hasn’t seen a record high since October 29 but is just -2.2% off of that level. 

Earnings also played a big role in market swings. Shares of Intel plunged more than -17% after the chipmaker reported a larger-than-expected loss and projected additional weakness for the coming quarter. Next week could bring even more earnings reactions: about 100 S&P 500 companies will report results, including Magnificent 7 members Tesla, Microsoft, Meta Platforms, and Apple. With all four stocks down -8% (Tesla) to -17% (Meta) from their record highs, investors will be zeroing in on updates related to capital spending, AI investments, and international sales.

International Stocks Continue to Outperform Despite Geopolitical Ripples

Although US equities saw the sharpest day-to-day moves, global markets also reacted to the flare-up in trans-Atlantic tensions. Concerns over a potential trade conflict weighed on international sentiment after the tariff announcement, especially because the dispute involved European countries. The developed markets MSCI EAFE Index was down on Tuesday and Wednesday, but recovered nicely on Thursday and Friday once tariff plans were pulled back. It was enough to give the index a +0.1% gain for the week and preserve a nine-week win streak. The MSCI UK Index led developed markets with a +0.8% gain to extend its own winning streak to nine weeks. Despite a struggling labor market and a reacceleration of inflation, UK retail sales ex-fuel rebounded a much-stronger-than-expected +3.1% after two months of declines. 

Emerging markets led global stocks as the MSCI Emerging Markets Index was up +1.1% following the previous week’s +2.3% gain. It is on a five-week win streak and has been positive in eight of the last nine weeks. The MSCI China Index ended the week off -0.5% after a handful of indicators underscored uneven growth across the world’s second largest economy. That overshadowed a blistering +7.6% jump for the MSCI Latin America Index. In US dollar terms, stocks in Brazil—the largest weight in the MSCI Latin America Index—were up +10.3% (Ibovespa Brasil Sao Paulo Stock Exchange Index), driven by positive macro signals around cooling inflation, hopes for ongoing domestic rate cuts, and improved economic stability. 

A sizable -1.8% decline in the US dollar was a big tailwind for non-US markets, more than erasing the three prior weeks of gains for the greenback. The US Dollar Index sits at 97.6, its lowest level since September. Barely a week ago, it was at its highest level (99.4) since early December.

Bonds: Treasury Yields and Bond Prices Essentially Flat for the Week

Like the stock market, the bond market saw some volatility but ultimately ended flat for the week. Concerns about fiscal developments abroad—specifically in Japan—helped push global yields higher early in the week, and then they eased as the week progressed. For the week US Treasuries yields inched up at the front of the yield curve, with the 2-year US Treasury yield up +1 basis point to 3.59%. The 10-year US Treasury yield was unchanged at 4.23%. And the long end of the curve was down a tick as the 30-year US Treasury yield slipped -1 basis point to 4.83%. Overall, the Bloomberg US Aggregate Bond Index returned +0.1%, following the prior week’s -0.1% return. Non-US bonds, as measured by the Bloomberg Global Aggregate ex US Bond Index, were up +0.8% following a -0.2% return the prior week.

Japanese government bond yields have been marching higher for weeks, but made headlines after surging to record highs early last week after Prime Minister Sanae Takaichi unexpectedly dissolved parliament and called a snap election for February 8. The announcement, paired with campaign promises to temporarily cut consumption taxes on food and beverages, triggered a sharp rise in Japanese government bond (JGB) yields—signaling investor concern about the country’s already heavy debt load. The 20‑year JGB yield surged to +3.46% on Tuesday—its highest point of the week—before easing to +3.27% after government reassurances. The 10‑year JGB yield rose to +2.26%, the highest since 1997.

Economics: Strong Growth, Steady Inflation, and Improving Sentiment

Economic data released this week showed an economy that remains resilient, even amid signs of gradual cooling. The US Bureau of Economic Analysis lifted its estimate for third-quarter GDP growth to +4.4%, up from +4.3%. Stronger exports and investment helped drive the upward revision, outpacing the second quarter’s +3.8% pace. 

Inflation remains muted as the Core Personal Consumption Expenditures (PCE) Price Index—considered the Federal Reserve’s preferred inflation measure—rose up just +0.2% in November and +2.8% for the year. Both readings matched October’s pace and were in line with Wall Street expectations, indicating inflation is easing slowly but remains above the Fed’s 2% target.

The University of Michigan’s Consumer Sentiment Index climbed to a much stronger-than-expected 56.4 in January, up from 52.9 in December—an encouraging sign for household confidence.

An early indicator of business activity for January saw a light pick up. S&P Global reported a slight rise in its flash US Composite PMI, with manufacturing activity accelerating faster than the services sector, but both firmly in expansionary territory.

The Bottom Line

A week dominated by geopolitics and earnings volatility left markets little changed, but investors closely focused on the risks ahead. The dramatic swings caused by tariff threats—and their quick reversal—highlighted how sensitive markets remain to policy surprises. With a flood of major earnings reports coming next week, the market’s attention may finally return to fundamentals.

Chart of the Week

The U.S. economy expanded more than originally estimated in the third quarter. The third and final estimate of real Gross Domestic Product (GDP) for Q3 2025 was revised higher to +4.4% from the previous estimate of +4.3% on December 23. Wall Street was expecting it to remain at the prior estimate of +4.3%. Stronger than previously reported exports and investment drove the upside surprise, more than offsetting a slight downward revision to consumer spending. Consumer spending, measured by Personal Consumption Expenditures (PCE), is the main engine of the economy, and it increased +3.5% in Q3, versus +2.5% in Q2 and just +0.6% in the first quarter. The PCE component contributed +2.34 percentage points to real GDP growth in Q3. Net exports added +1.62 percentage points to growth in Q3, as imports fell -4.4% versus -4.7% in the prior estimate, while exports increased +9.6% versus +8.8% in the previous estimate. Government Spending increased +2.2% following a -0.1% decline the second quarter and +0.6% in the first quarter. The Personal Saving Rate fell to +4.2% from +5.3% in the prior quarter. The GDP Price Index (GDP Price Deflator) was unrevised at +3.8%, unchanged from the second quarter and is up from +3.4% in the first quarter. The bottom line from the report is that the US economy showed much stronger growth in the spring and summer despite higher US tariffs and was revised higher in each of the prior two estimates. In addition, Corporate Profits surged after two quarters of weak or negative results (adjusted earnings before taxes shot up 4.5% in the July-to-September period). The final piece of the 2025 GDP puzzle, fourth-quarter GDP, won’t be available for another month. The Atlanta Fed GDPNow is currently projecting +5.4% growth in Q4. If that holds—though it will likely fall with subsequent inputs—it would bring the overall 2025 growth rate up to +3.2%.

US Economy Grew 4.4% in the Third Quarter, Best Since Q3 2023

US Gross Domestic Product (GDP), quarterly annualized rate (Q3 2022 – Q3 2025)

Source: US Bureau of Analysis, Trading Economics.

The Week Ahead

After last week’s light holiday-shortened economic calendar, activity picks up this week. Monday starts slowly with November Durable and Capital Goods Orders, catch-up from the government shutdown. November Home Price Indexes from S&P Cotality and FHFA are reported Tuesday, along with Consumer Confidence for January from the Conference Board. The regular weekly MBA Mortgage Applications numbers come Wednesday morning, and then in the afternoon, the Federal Open Market Committee (FOMC) interest rate decision is announced. Anticipation will be muted as the Federal Reserve (Fed) is widely expected to keep the federal-funds rate unchanged at 3.50%-3.75%. Nevertheless, Wall Street will be eager to hear from Jerome Powell for clues about how long the Fed plans to hold rates steady. After the quarter percentage point cuts at each of its last three meetings of 2025, Fed Funds futures are pricing in at least one more such cut this year. The November US Trade Balance and November Factory Orders come Thursday, and December wholesale inflation pressures will be revealed Friday with the Producer Price Index (PPI).

A number of regional Fed reports are also slated for release. The Chicago Fed National Activity Index (CFNAI) and the Dallas Fed Manufacturing Survey are reported Monday, Richmond Fed Manufacturing is on Tuesday, and the Chicago Fed MNI Business Barometer is Friday.

Central banks outside of the US will also be busy, with interest-rate decisions from the Bank of Canada, as will central banks in Singapore, Sweden, Brazil, and South Africa. Last week, the Bank of Japan and central bankers in Norway, Indonesia, Malaysia, Romania, and Kazakhstan kept interest rates steady. Loan prime rates in China were also unchanged. Central bank officials in Turkey and Paraguay lowered borrowing costs.

Markets will also be paying attention to earnings results with about a fifth of S&P 500 companies reporting next week, including four of the Magnificent Seven (Apple, Microsoft, Meta Platforms, and Tesla). Boeing and General Motors report results on Tuesday, followed by Meta Platforms, Microsoft, and Tesla on Wednesday. Apple, Mastercard, and Visa announce their earnings on Thursday, and energy giants Chevron and Exxon Mobil close out the week on Friday.

Did You Know?

BROADENING – After just 31% of S&P 500 stocks outperformed the index in 2025, 65% of stocks beat the index in the first two weeks of 2026 (through January 14). That is the strongest market breadth since 2001 and second best in history. Moreover, while just 3 of 11 S&P 500 sectors beat the index in 2025, 8 of 11 outperformed to start 2026, with materials, energy, industrials, and consumer staples leading the way. (Source: Bloomberg)

RATES DOWN – Bankrate.com’s national average 30-year fixed mortgage rate fell to 6.21% as of January 14 after the Trump Administration instructed Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities. Mortgage rates are now -1.2 percentage points lower year-over-year and at their lowest level since September 14, 2022. (Source: Bankrate.com)

$1,000 CAR PAYMENTS – A record one in five (20.3%) of new car buyers who financed their purchase committed to monthly payments of over $1,000 during Q4 2025. The average monthly payment for financed new vehicle purchases also hit an all-time high of $772. (Source: Edmunds)

This Week in History

BAD CALL – On January 20, 1999, Federal Reserve Chair Alan Greenspan said there was a possibility that US stocks would “have difficulty” sustaining their recent returns and that investors were expecting “substantially greater growth in profits than has been experienced of late.” Technology stocks promptly hit a fresh record high and would not peak for another 14 months. (Source: The Wall Street Journal)

Economic Review

• The preliminary “flash” S&P Global U.S. Composite Purchasing Managers Index (PMI) showed economic activity continued to expand in January, ticking up to 52.8 from 52.7 the month before. That was under Wall Street expectations for 53.0 but still in expansion territory (results above 50 signal economic expansion). The Manufacturing PMI rose to 51.9 from 51.8 the prior month, which was shy of expectations for 52.0. Manufacturing output growth picked up to the highest since last August, reaching the second strongest since May 2022. Meanwhile, the Services PMI held steady at 52.5, though that was below expectations for and improvement to 52.9. The sustained expansion was driven by a rise in New Orders from December’s 20-month low. Manufacturing New Orders rose only slightly following a fall in December, and although New Orders in the service sector picked up compared to December, the latest growth was again notably below average. Exports were a notable source of weakness in the report, for both manufacturing and services, resulting in the largest drop in overall new export orders since April 2025. While manufacturing exports fell at the fastest pace since last April, services exports fell at a rate not seen since November 2022. Employment rose only slightly in January following a similarly weak increase reported in December. The near-stalled job market reflected concerns from companies over rising costs and softer sales growth in recent months. Inflationary pressures remain elevated but moderated from December’s seven-month high to the lowest since last April. The moderation reflected a cooling of Input Prices in the service sector, while they rose at the fastest pace since last September in the manufacturing sector. The stubbornly elevated level of input cost inflation fed through to a further broad increase in Output Prices for both manufacturing and services. January’s rise in average Output Prices charged was slightly cooler than in December, but still among the largest recorded over the last three years. Service sector selling prices rose at a slightly reduced rate in January, but manufacturing selling prices hit a five-month high, often attributed to the need to pass tariff-related costs or broader raw material price rises on to customers.
• The final reading of the January University of Michigan Consumer Sentiment Index improved to 56.0 from the preliminary reading of 52.4 and the final level of 52.9 in December. That was far above the 54.0 reading Wall Street was expecting. In the same period a year ago, the index stood at 71.7. The Current Economic Conditions component jumped to 55.4 from the preliminary reading of 52.4 and the final 50.4 the prior month. The Consumer Expectations component rose to 57.0 from the 55.0 preliminary reading and the 54.6 level the prior month. One-year inflation expectations fell to 4.0% from the preliminary 4.2% and is the lowest since January 2025. The five-year inflation expectations slipped to 3.3%, down from the 3.4% preliminary reading, but slightly above the 3.2% final reading the prior month. The bottom line is that consumer sentiment improved much more than expected and inflation expectations fell as well.
• Personal Spending rose +0.5% in November, matching expectations and the prior month’s reading (unrevised). After adjusting for inflation, Real Personal Spending was still +0.3% for the month, matching expectations and the prior month (unrevised). Personal Income increased +0.3%, up from +0.1% the prior month (unrevised) but shy of expectations for +0.4%. Real Disposable Income was up +0.1% month-over-month, after declining -0.1% the prior month. The Personal Savings Rate, as a percentage of disposable personal income, fell to +3.5% in November from +3.7% in October. 
• The cost of goods and services rose +0.2% in October and November, matching expectations. For the year, the Personal Consumption Expenditure (PCE) Deflator (aka PCE Price Index) was up +2.8%, in line with expectations and up a tick from the prior month’s +2.7% (unrevised). The Core PCE Price Index, which excludes food and energy and is the Fed’s preferred inflation gauge, was up +0.2% for the month, also matching expectations and unchanged from the prior month (unrevised). Year-over-year, the Core-PCE Price Index was up +2.8%, matching expectations and down from +2.9% (unrevised) the prior month. The key takeaway from the report is that the Core PCE Price Index, which is the Fed’s preferred inflation gauge, was at +2.8% in November, essentially unchanged from September. 
• The Kansas City Fed Manufacturing Survey was flat again in January (after December was revised down from +1), which was well below expectations to increase to +4. New Orders inched up to 0 from -2, the Production index ticked higher to -2 from -3, but Shipments fell to -2 from 0. Employment improved with the Number of Employees rising to 0 from -4, while the Average Employee Workweek improved to +4 from +3. The Prices Paid index rose to +44 from +41, while the Prices Received index fell to +19 from +24. The Kansas City Fed Service Sector Outlook Survey improved to +2 from +1 (after a downward revision from +3).
• The National Association of Realtors (NAR) reported that Pending Home Sales dropped -9.3% in December after the prior month’s +3.3% rise (unrevised) and breaks four consecutive months of greater housing demand. That was far below Wall Street expectations for a -0.3% decrease. At 71.8, the seasonally adjusted US Pending Home Sales Index was back at July 2025 levels following its highest level since February 2023 the prior month. On a non-seasonally adjusted basis, the year-over-year rate of change in sales fell -1.3%, down from the prior month’s -0.3% annual rate (unrevised). The decline was broad-based with all census regions falling: the Midwest sank -16.2% for the month and -8.6% for the year; the West dropped -13.3% for the month and was down -3.1% for the year; the Northeast was down -11.0% and -1.2% for the month and year; and the South fell -4.0% for the month but was up +3.3% for the year.
• The Commerce Department reported Construction Spending for September and October as it continues to play catch-up from the government shutdown. For September, Construction Spending declined -0.6%, far below expectations to come in at +0.1%, and following an upwardly revised +0.4% gain (originally +0.2%) in August. Then in October, Construction Spending jumped +0.5%, beating expectations to come in at +0.1%. On a year-over-year basis, Construction Spending was down -1.5% and -1.0% for September and October, respectively. Total Private Construction was up +0.6% in October following a -0.9% drop in September. Total Public Construction was +0.4% and +0.1% in September and October. Private Residential Spending improved from -1.4% in September to +1.3% in October, while Private Nonresidential Spending was down -0.3%, after falling -0.5% the prior month. The report showed that Single-Family Construction was down -0.2% for both months. The key takeaway is that construction spending rebounded in October, driven primarily by private residential spending. 
• Weekly MBA Mortgage Applications jumped +14.1% for the week ending January 16, after surging +28.5% the prior week. The Purchase Index increased +5.1% after jumping +15.8% the prior week. The Refinance Index jumped +20.4% after rocketing +40.1% the prior week. The average 30-Year Mortgage Rate slipped to 6.16% from 6.18% the prior week. This is the lowest level since 6.14% for the week of September 27, 2025.
• Weekly Initial Jobless Claims rose +1,000 to 200,000 for the week ending January 17, better than expectations for 209,0000. The prior week was revised higher to 199,000 from 198,000. The number of people already collecting unemployment claims (i.e., Continuing Claims) fell -26,000 to 1,849,000 for the week ending January 10, which was worse than expectations for 1,890,000. The prior week’s reading was revised lower to 1,875,000 from 1,884,000.

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.