Weekly Market Update

Strong Start to 2026

📈 Markets Digest Strong Start to 2026 as AI Momentum and Economic Stability Drive Gains
Stocks began the year on a strong footing last week as investors looked past rising geopolitical and political headlines and instead focused on improving economic fundamentals and renewed enthusiasm around artificial intelligence. The S&P 500 is now up about 1.80% this year, reflecting growing confidence as markets move further into 2026.

Early in the week, markets responded positively to reports that U.S. military forces had detained Venezuelan President Maduro, with investors emphasizing potential longer-term economic opportunities in the oil-rich nation rather than near-term uncertainty. A softer-than-expected ISM Manufacturing report reinforced expectations for a supportive Federal Reserve and helped strengthen confidence in a soft-landing economic outlook.

That constructive backdrop was reinforced by renewed AI optimism following commentary from major technology leaders, including NVIDIA CEO Jensen Huang at the Consumer Electronics Show. While volatility briefly picked up midweek after reports that China halted domestic orders for NVIDIA’s H200 chips and political rhetoric weighed on sentiment, the pullback was limited and orderly.

By week’s end, markets regained upward momentum as the December jobs report was viewed as “Goldilocks,” showing slower job growth but a welcome decline in the unemployment rate. Solid consumer sentiment and stable inflation expectations added further support, allowing stocks to close the week higher. Overall, last week’s action reflected healthy rotation beneath the surface and a market that’s seemingly more focused on fundamentals rather than headlines.

💹 Rates, Dollar & Commodities
Interest rates were largely stable, with the 10-year Treasury yield finishing just under 4.20%, a level that remains neutral and supportive for risk assets. Economic data did little to change expectations for growth or inflation.

The U.S. dollar strengthened modestly, driven primarily by weaker inflation data in Europe rather than a shift in U.S. fundamentals. Importantly, the dollar remains within a range that has not historically posed a headwind for stocks.

Despite the stronger dollar, commodities moved higher overall. Energy prices were supported by ongoing geopolitical tensions, while precious metals rallied hard, seemingly benefiting from safe-haven demand and inflation concerns.

Source: Stockcharts.com

🔎 Takeaway
Last week’s market performance highlighted the relative resilience of equities amid ongoing uncertainty. While political and geopolitical risks remained elevated, markets continued to draw support from stable economic growth, easing inflation pressures, and durable earnings trends, particularly within AI-related industries.

Economic data continues to strike a favorable balance, supporting growth without forcing the Federal Reserve into a more restrictive stance. With interest rates and the dollar in neutral territory and market leadership gradually broadening, recent gains appear grounded in improving fundamentals rather than excess optimism.

🔭 This Week – What Matters for Markets
The coming week remains important for shaping expectations around Fed policy. The key focus will be the CPI inflation report, as progress on inflation remains the primary condition for additional rate cuts in 2026. Softer inflation readings would strengthen the case for possible easing later this year and could provide further support for equities.

Investors will also watch retail sales as a gauge of consumer health, along with weekly jobless claims and regional manufacturing surveys for early signals on economic momentum. Markets are likely to respond best to continued signs of stability rather than dramatic acceleration or slowdown.

🌐 Broad Overview
Markets enter 2026 supported by steady economic growth, a resilient labor market, and inflation that continues to move in a constructive direction. While uncertainty around policy and geopolitics has increased, financial conditions currently remain supportive and corporate fundamentals broadly healthy.

Artificial intelligence remains a powerful long-term driver of growth, though leadership is becoming more selective and focused on companies with clear earnings visibility. With volatility resetting expectations and investors beginning the year with fresh capital, the overall backdrop remains constructive.

If you have any questions about your portfolio or the market outlook, please contact your CIAS Investment Adviser Representative.