Daily market snapshot

• Stocks trade lower with tariffs and geopolitics weighing on sentiment – U.S. equity markets closed sharply lower Tuesday, with the S&P 500 and Nasdaq falling by over 2%, and the Dow losing 1.8%.* Over the weekend, President Donald Trump stated that eight European nations would face 10% tariffs beginning in February, rising to 25% on June 1 unless a deal is reached for the sale of Greenland to the U.S., arguing that the island is critical to U.S. security.* European officials met on Sunday evening following the announcement but have not announced any retaliatory measures.*
  
  With the European Union responsible for about 19% of U.S. imports and exports in 2025*, if the tariffs are implemented and stacked on top of existing duties, we would expect them to put modest downward pressure on U.S. and European economic growth while also exerting upward pressure on U.S. goods prices. A retaliatory response would be likely from Europe and could put additional downward pressure on U.S. economic growth by making U.S. exports less attractive. The announcement sparked a sell-off in U.S. assets, with stocks lower, longer-term Treasury yields higher, and the ICE U.S. Dollar Index down by nearly 1%, with markets reacting in a similar fashion to the tariff announcements in April 2025.* By contrast, precious metals surged, with gold up over 3% and silver gaining 6%.* European markets traded lower as well on the news, with the Euro Stoxx 50 closing down by roughly 0.6%.* Further adding to global uncertainty, long-term Japanese government bond yields surged following reports that the government could eliminate a tax on food for two years, stoking concerns over the nation's fiscal position.* The 30-year Japanese Government Bond yield rose by nearly 0.3%, to 3.87%.* 
  
  While these developments add to uncertainty, de-escalation remains possible, in our view, particularly with many global leaders meeting this week in Davos for the World Economic Forum. Moreover, despite the added uncertainty, we believe markets are entering this period from a position of strength. As we noted in last week's Weekly Market Wrap, economic growth has been strong in recent quarters, and we expect that resilience to continue in 2026. Corporate earnings have also grown at a robust pace, and expectations point to continued strength in 2026, with estimates calling for nearly 15% earnings growth for the S&P 500.* Thus, we maintain our overweight to equities versus fixed income, and we recommend investors use pockets of volatility to add to quality investments in line with their financial goals. In our view, asset classes such as U.S. large- and mid-cap stocks, international small- and mid-cap stocks, and emerging-market equities are poised to benefit from a constructive economic and earnings backdrop in the year ahead.
   
• Long-term perspective on market volatility – While the S&P 500 remains more than 10% higher over the past year*, today’s decline and the barrage of headlines can be unsettling for investors. However, it is important to remember that volatility is a normal part of investing. In 2025 alone, the S&P 500 posted a peak‑to‑trough decline of 19% in April, only to finish the year up more than 16% in price terms.* Over the longer term, the S&P 500 has, on average, experienced three to four 5% pullbacks in a calendar year and one 10% pullback.** Additionally, 15% pullbacks have occurred roughly once every two years, while pullbacks of 20% or more have occurred, on average, once every three years.** Despite numerous pullbacks along the way, the S&P 500 has grown at an annualized rate of more than 10%, including dividends, over the past 30 years.* In our view, this underscores the importance of sticking to your investment strategy through pockets of volatility rather than reacting to headlines.
   
• Fourth-quarter earnings season off to a strong start – Earnings season unofficially kicked off last week with several large U.S. banks reporting mostly solid results.* Earnings will be in focus this week as well, headlined by results from Netflix after the market close today and health care giant Johnson & Johnson tomorrow morning. With roughly 7% of companies in the S&P 500 having reported thus far, estimates are calling for roughly 7% earnings growth for the S&P 500 in the fourth quarter, bringing 2025 annual earnings growth to over 11%.* Encouragingly, strong earnings growth is expected to persist in the quarters ahead, with analyst estimates calling for S&P 500 earnings growth of roughly 15% in 2026.* In our view, a healthy economic backdrop should help pave the way for strong earnings growth in 2026, which should help provide support to equity markets.

Brock Weimer, CFA;
Investment Strategy

^{Source: *FactSet **FactSet, Edward Jones}

Friday, 1/16/2026 p.m.

• Markets close lower as earnings season kicks off – Equity markets finished modestly lower on Friday, as real estate and industrial stocks led gains, while the health care sector lagged*. Bond yields rose, with the 10-year Treasury yield at 4.23%*. Internationally, Asia finished higher following the announcement of a Taiwan-U.S. trade deal that would lower tariffs on imports from Taiwan to 15%, from 20%, in exchange for a $250 billion investment in U.S. computer-chip production capacity*. Europe closed lower following President Trump's proposal of new tariffs on countries opposing U.S. control of Greenland. The U.S. dollar strengthened against major currencies*. In commodities, WTI oil traded higher amid volatility in recent days, likely driven by geopolitical risks*.
   
• Earnings season off to a solid start – Fourth-quarter earnings season kicked off this week, with the major banks leading the way. JP Morgan, Bank of America, Wells Fargo, Goldman Sachs and Morgan Stanley all announced earnings that beat analysts' estimates*. Earnings for S&P 500 companies are expected to rise about 8.0% year-over-year for the fourth quarter, led by the technology sector with over 25% growth*. Robust profit growth is expected to continue through 2026, with estimates calling for a roughly 15% rise in earnings*. With valuations elevated relative to history*, we believe continued earnings growth will be a key driver of further stock‑market gains in 2026.
   
• Bond yields edge higher – Bond yields rose, with the 10-year Treasury yield at 4.23%*. The benchmark yield has remained largely range-bound between 4.0% and 4.25% in recent months*. Bond markets are pricing in a Fed pause following three consecutive rate cuts to end 2025**. Given inflation remains above target, we expect the Fed to hold steady for at least a few months before considering additional cuts. A labor market characterized by slow hiring and modest layoffs should keep the Fed on track for one or two more rate cuts later this year, assuming inflation continues to moderate, in our view.

Brian Therien, CFA;
Investment Strategy

^{Source: *FactSet ** CME FedWatch}

• Markets stabilize on easing geopolitical tensions and strong earnings – U.S. equity markets finished higher on Thursday, with stocks responding positively to comments from President Trump that signaled military action against Iran is not imminent.* Strong earnings from Taiwan Semiconductor supported technology stocks, after the company announced better‑than‑expected earnings and sales while also raising guidance for the current quarter.* Additionally, Goldman Sachs and Morgan Stanley each reported better-than-expected earnings, with strength in investment banking a bright spot for both.* On the economic front, jobless claims fell to 198,000 last week, while Federal Reserve regional activity indexes in Philadelphia and New York were better than expected in January.* The healthy economic data showed up in markets via strong performance in small-caps, with the Russell 2000 Index gaining roughly 1%.* In commodity markets, the easing in geopolitical tensions was reflected in lower prices, with oil down by nearly 5% and gold trading lower as well.* Bond yields finished modestly higher, with the 10-year yield climbing 0.03% to 4.17%.*
   
• Earnings in focus – Corporate earnings were in focus Thursday, headlined by strong results from tech giant Taiwan Semiconductor. Taiwan Semiconductor posted better‑than‑expected fourth‑quarter earnings and sales, while also raising guidance for the current quarter, citing strong AI demand as the driver behind the strong performance.* Additionally, investment banks Goldman Sachs and Morgan Stanley exceeded fourth‑quarter earnings estimates, along with asset manager BlackRock.* At an index level, S&P 500 earnings are expected to grow by roughly 7% in the fourth quarter and 11.4% for the full year in 2025.* Strong profit growth is expected to continue throughout 2026, with estimates calling for roughly 15% earnings growth, and the technology, industrials, and materials sectors all expected to see earnings growth of over 15%.* With valuations elevated relative to history, we believe strong earnings growth will be a key ingredient for further stock‑market gains in 2026.
   
• Jobless claims fall, signaling stable labor-market conditions – Initial jobless claims for last week fell to 198,000, below expectations for 215,000 and well below the 30‑year median of 320,000.* Continuing jobless claims also edged lower to 1.88 million but remain well above the lows of around 1.35 million in 2022 and above the pre‑pandemic average (2018–2019) of around 1.7 million*, perhaps signaling that those without work are having a more difficult time finding employment. Today’s jobless‑claims data follows last week’s employment report, which showed nonfarm payrolls grew by 50,000 in December, bringing the average monthly gain for 2025 to 49,000—a meaningful slowdown from an average of 168,000 in 2024.* However, despite slowing nonfarm‑payroll growth, the unemployment rate fell back to 4.4% in December, indicating a low-hire-low-fire enviornment.* In our view, 2026 is likely to be another year of moderate job growth, with nonfarm payrolls averaging between 50,000 and 100,000. However, we expect steady economic activity, which should keep layoffs contained, with the unemployment rate likely stabilizing around 4.5% in 2026.*

Brock Weimer, CFA;
Investment Strategy

^{Source: *FactSet}

• Stocks lower for a second day – Equity markets moved modestly lower on Wednesday, as rising geopolitical tensions in Iran weighed on stock-market sentiment. The technology-heavy Nasdaq underperformed the S&P 500*. Meanwhile, gold prices and Treasury bonds edged higher. Gold prices were up about 1% on the day and are up about 7% on the year thus far*. The VIX volatility index, also known as the Wall Street fear gauge, also climbed to around 17, close to its highest level of the year* – although the VIX is still in line with its average levels over the past year*.
   
• Geopolitical tensions weigh on markets – This year thus far has been mired with geopolitical uncertainty. This began with U.S. military action in Venezuela and the assertion that the U.S. would now run Venezuela until a safe and judicious transition of power takes place. In addition, the U.S. is planning to rebuild the oil infrastructure in Venezuela, with potential support from major U.S. energy companies. Investors are now monitoring the growing protests in Iran with some threat of intervention by the U.S. administration. This has weighed on market sentiment and driven a higher VIX volatility index. Perhaps most notably, from a market perspective, tensions in these regions typically manifest in the oil and energy markets. We have seen oil prices rise about 5% this year thus far, outpacing the S&P 500, which is up about 1.2%*. However, keep in mind that oil prices were near multiyear lows when the year began, given that the oil market was likely in an oversupply situation globally*. In our view, despite uncertainty in oil-producing regions like Venezuela and Iran, any reduction in oil supply can likely be supplemented over time by other OPEC members and the U.S. increasing production.
   
• Earnings season kicks off this week – The fourth-quarter earnings season for the S&P 500 kicks off in earnest this week, starting with large U.S. banks. Thus far, underlying results have been solid, with banks noting solid loan demand and trading volumes*. However, given the nice rally in financials over the last several months, the sector has come under some pressure after reporting earnings*. More broadly, fourth-quarter earnings are expected to be higher by about 7.5% year-over-year, driven by strong performance in the technology and materials sectors*. For the full year, earnings expectations have been revised higher to about 14.8%, driven by strong growth across multiple sectors*. In our view, the broadening of earnings growth beyond just technology should continue to drive some broadening in market leadership as well, from both growth and value sectors.

Mona Mahajan;
Investment Strategy

^{Source: *FactSet}

• Stocks slide – U.S. equities moved lower today, with softer-than-expected inflation data failing to lift market sentiment*. Large-cap stocks were the worst performers, with the S&P 500 index down 0.2%, led by a near 2% decline in the financial sector after disappointing JP Morgan results*. Short-term U.S. government bond markets rallied following cooler price data, with the 2-year Treasury note yield a touch lower at 3.52%, and the 10-year yield at 4.17%*. The dollar moved initially lower against a basket of international currencies after the inflation report but subsequently rebounded to finish the session up*. Gold prices edged off their record highs, while oil prices climbed to a two-month high on the back of increasing tensions between the U.S and Iran*.
   
• Signs of encouragement in December CPI data – Economists have struggled to get a read on inflation over recent months, with the October and November CPI data heavily distorted by the government shutdown*. December, therefore, represents the first "clean" inflation report for some time, and the signals were generally positive, in our view. Headline inflation was firm over the month, in part reflecting another large rise in food prices*. However, core inflation data, which strip out the volatile food and energy prices, were softer than feared at 0.2% month-over-month, helping bring the year-over-year rate down to 2.6%*. This downside surprise was driven by core goods inflation, which was flat in December and is now up by just 0.2% over the past three months in annualized terms*. While part of this slowdown reflects bumpy used car prices*, the Fed will likely be watching these data carefully in coming months to see if the inflationary impulse from higher tariffs is starting to ease. Services inflation was firmer in December, with shelter prices in particular bouncing back after data collection issues in October and November*. However, this component of inflation clearly slowed in 2025*, and we expect a further gradual moderation this year. Overall, the report provides tentative encouragement that we are seeing a gradual easing in underlying U.S. inflation pressures, in our view.
   
• A careful balancing act for the Fed – Today's inflation data will not change the Fed's thinking ahead of its upcoming January meeting, in our view. The central bank has provided a strong hint that it is set to take a pause from its recent run of interest-rate cuts **, and the market is currently pricing nearly no chance of a move*. However, signs of gradually cooling price pressures help support the case for further careful policy easing through 2026, especially with the most recent labor report showing still subdued hiring rates*. Markets are pricing around a one in five chance of a 25 basis point (0.25%) cut in March and April, with the odds of a cut in June, after current Fed Chair Powell's term ends, seen higher at 45%*. The Fed's next move is complicated by news this week that Chair Powell is under investigation by the DoJ, with Powell arguing that this represents part of a political campaign to pressure the central bank to lower interest rates*. Senior Republicans and Democrats have pushed back on this investigation and warned that they will not confirm the president's nominee for the Fed board while the issue is outstanding*. This pushback has seemingly helped ease some of the market concerns around threats to the central-bank independence that surfaced at the start of the week*.

James McCann;
Investment Strategy

^{Source: *Bloomberg **Federal Reserve}