Weekly Market Report: January 16th, 2026
Last week gave us early innings earnings reports (mixed) and a heavy dose of political headlines including DOJ criminal investigations of the Fed, Greenland takeover talks, associated E.U. and retaliatory tariff threats, several market interventionist policy indications. In the end, financial markets maintained a longer-term perspective where strong earnings, economic growth, and market-oriented policies continue to translate to sound returns. Global equity markets closed higher on the week as did interest rates, the USD, and commodities, all of which sit marginally higher thus far in 2026.
Financial Market Highlights
- The S&P 500 closed down slightly on the week but not before marking a new record high. The new year is seeing leadership from small caps, non-U.S., and value stocks while growth stocks lag.
- Fourth quarter earnings season kicked off last week with expectations of double-digit earnings growth, particularly from the technology sector, and positive forward guidance from management.
Economic Highlights
- Last week’s economic calendar featured November inflation coming in at expectations along with data on retail sales, housing market, and industrial production. Inflation data reinforced the downward year over year trend, bolstering the more dovish voices within the FOMC.
Bullish Asset Allocation Narratives
- Strong consumption with ample room for the consumer to re-lever and market-related wealth effects.
- AI boom including substantial infrastructure buildouts, projected productivity gains, and earnings potential.
- Growth conducive policy backdrops including a less restrictive Fed, fiscal stimulus, and deregulation.
- Robust U.S. corporate earnings growth, profit margins, and forward guidance.
Bearish Asset Allocation Narratives
- Risks to consumption due to lower/middle class price fatigue (cumulative inflation), higher interest rates (sluggish housing market), and slowing labor markets.
- AI bust given unproven ROI/monetization profile, narrow equity markets, and industry specific concerns (circular transactions, increased debt financing, more asset intensive business models).
- Monetary policy mistakes given prevailing labor market dynamics and inflation trends.
- Tariff and immigration policies introducing longer-term structural headwinds on aggregate demand, trade, and hiring alongside shorter-term goods and sectoral level labor inflation.
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