January 2026 Market Insights Report
January 2026 delivered a strong but uneven start to the year, with U.S. and global equities rising, leadership broadening beyond mega‑caps, and investors balancing optimism with persistent geopolitical and policy uncertainty. Markets climbed despite a weaker U.S. dollar, mixed corporate earnings, and shifting expectations for Federal Reserve rate cuts. Developed global equities, including emerging markets, outperformed U.S. stocks, while bonds posted mixed results.
Equity Markets: Broad Strength Across Regions
U.S. equities rose across all major indices, with the S&P 500 up about 1.4%, the Nasdaq up 1.0%, and the Dow up 1.7%.
The S&P 500 surpassed the 7,000 level for the first time, signaling strong momentum.
Market leadership broadened beyond 2025’s AI‑driven mega‑caps, with value stocks, small caps, energy, and materials outperforming.
International equities outpaced U.S. markets, supported by a weaker dollar and strong performance in emerging markets and Asia‑Pacific.
The MSCI World Index gained 2.3%, while MSCI World ex‑US rose 4.7%.
Commodities & Currency
Gold prices surged, reflecting safe‑haven demand amid geopolitical tensions.
The U.S. dollar weakened, boosting international asset performance.
Although precious metals dipped in early February, they have rebounded somewhat from their lows.
Cryptocurrency has been much in the news, with Bitcoin falling precipitously alongside other cryptocurrencies. As I write this on February 4th at noon, Bitcoin is currently trading at $79,694, down from the high of about $125,000. This equates to a loss of about 36%. While this is a topic for another day, it is increasingly difficult to view cryptocurrency as a reliable currency or store of value given the extreme volatility of its price.
Fixed Income & Rates
Global government bonds delivered mixed returns, with long‑dated yields rising—especially in Japan—while Germany diverged with more stable yields.
U.S. bonds remained steady, supported by expectations of future Fed rate cuts and easing financial conditions.
Corporate bonds performed well, with spreads narrowing and risk appetite improving.
Economic & Policy Backdrop
The U.S. economy showed resilience, even as tariff and trade policy uncertainty weighed on global sentiment.
Corporate earnings remained solid, helping sustain investor confidence.
Geopolitical tensions persisted but were largely shrugged off by markets.
Investor sentiment stayed cautiously optimistic heading into February.
Inflation, employment, and consumer confidence data were mixed, but not disruptive to market sentiment.
Corporate earnings remained strong, with S&P 500 companies on pace for a fifth consecutive quarter of double-digit EPS growth.
Key Themes to Watch Going Forward
Broadening market participation, which we view as a healthier sign for markets compared to narrow mega-cap leadership.
Strength in international and emerging markets, especially if the dollar continues to weaken.
The Fed’s policy trajectory, with markets expecting rate cuts later in 2026, and a wildcard being whether new Fed leadership can maintain independence.
Geopolitical risks, which could reintroduce volatility despite January’s resilience. The war in Ukraine continues, and Iran has become more provocative toward the U.S.
The durability of corporate earnings as valuations remain elevated.
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