Daily market snapshot

Monday, 2/2/2026 p.m.

• Partial government shutdown in effect – A partial government shutdown took effect Saturday morning, as funding bills for six federal agencies have yet to be signed into law.** The Senate passed a bipartisan bill Friday night to fund five of the six agencies for the full year, while extending funding for the Department of Homeland Security for two weeks to allow for further negotiations.** However, the bill will still need approval by the House of Representatives, with a vote expected to take place tomorrow.* U.S. equity markets took the news in stride, with all three major averages trading higher on Monday, supported by a better-than-expected ISM Manufacturing PMI reading for January.* The upbeat PMI reading also put modest upward pressure on bond yields, with the 10-year Treasury yield rising to 4.28% while the ICE U.S. dollar index advanced by roughly 0.7%.*
  
  The shutdown will create temporary disruptions across the affected agencies, with some federal employees furloughed for the duration of the shutdown. However, furloughed workers will receive back pay once funding resumes, thanks to the Government Employee Fair Treatment Act of 2019. Importantly, a shutdown does not affect the government’s ability to service its debt, and Social Security payments will continue. A unique aspect of the current shutdown is that it is occurring at the start of tax season, which could delay return processing and refunds—an area of particular focus for 2026, as household refunds are expected to rise due to tax legislation passed in 2025.*** Additionally, a prolonged shutdown could delay key economic releases—such as labor-market and inflation reports—as they were last fall. The Bureau of Labor Statistics announced today that the shutdown will delay the release of tomorrow’s JOLTS report as well as Friday’s Employment Situation report.*
  
  While disruptive, the effects of government shutdowns are typically temporary. During the most recent shutdown, the Congressional Budget Office estimated that the lapse reduced fourth-quarter real GDP growth by roughly 1.5 percentage points, though it also projected that activity would rebound in subsequent quarters as federal spending resumes and employees receive back pay.*** While there are no guarantees in Washington, early reports suggest the funding bill passed by the Senate on Friday could move quickly through the House, helping to avert another prolonged shutdown and limiting the economic impact, in our view.
   
• Market and economic impact of government shutdowns – Unfortunately, government shutdowns have become far too common, with three occurring over the past decade and 21 since 1976.** While shutdowns can create temporary disruptions, financial markets have tended to look through them. During the most recent shutdown—the longest on record at 43 days—the S&P 500 rose 2%, the 10-year Treasury yield was little changed (rising from 4.1% to 4.14%), and the U.S. dollar index increased by about 0.7%.* From an economic perspective, shutdowns tend to slow activity during the funding lapse, followed by a rebound in subsequent months. The Congressional Budget Office estimates that the 2025 shutdown reduced fourth-quarter annualized GDP growth by roughly 1.5 percentage points; however, a recent string of strong economic data suggests fourth-quarter growth remained robust, with the Atlanta Fed’s GDPNow tracker indicating growth of more than 4%.*
   
• Action for investors – The partial government shutdown does not alter our outlook for markets or the economy over the coming year. We continue to believe that a healthy global macroeconomic backdrop creates an attractive environment for stocks, and we maintain our overweight recommendation to equities relative to bonds. Within equities, we find U.S. large- and mid-cap stocks particularly attractive, supported by strong AI-related investment trends and resilient economic activity. In our view, the U.S. economy is also likely to receive incremental support from last year’s tax legislation during the first half of the year. Internationally, we view developed small- and mid-cap stocks and emerging-market equities as attractive opportunities as well. These segments may benefit from steady global growth and strong equity-market momentum in technology-heavy emerging-market regions. From a planning perspective, because we expect the shutdown to be short-lived, we don't anticipate meaningful financial-planning implications.

Brock Weimer, CFA;
Investment Strategy

^{Source: *FactSet **Committee for a Responsible Federal Budget ***Congressional Budget Office}

Friday, 1/30/2026 p.m.

• Markets mixed after Fed chair announcement – President Trump has announced that he will nominate Kevin Warsh to be the next Fed chair*. The U.S. dollar moved higher after the news*, with Warsh's experience at the Fed, and hawkish stance on inflation in the past, boosting his credibility with investors, in our view. Reactions in the bond market were mixed, with shorter-dated U.S. Treasuries posting a small rally, although longer-maturity bonds were a touch softer, potentially reflecting concerns that Warsh might push to lower the Fed's holdings of government bonds*. Finally, an initial sell-off in equity markets picked up momentum over the day, with investors likely questioning the timing and extent of interest-rate cuts under Warsh's leadership of the Fed*. Against this backdrop, interest-rate-sensitive small-cap equities were among the worst performers, with the Russell 2000 finishing 1.6% lower, while the S&P 500 index dipped 0.5%. Elsewhere, commodities continue to exhibit significant volatility, with today's rebound in the dollar contributing to large declines in gold (9%) and silver prices (28%)*. WTI crude continues to move higher, rising to $66 a barrel amid escalating geopolitical tensions between the U.S. and Iran*.
   
• Warsh brings experience to the Fed – Kevin Warsh served on the Fed Board between 2006 and 2011 and his banking sector experience was seen as important in helping the Fed develop its emergency toolkit at the peak of the financial crisis*. Warsh was hawkish on inflation risks during this term, arguing for higher interest rates even amid painfully high unemployment after the financial crisis*. This stance seems to have softened in recent times, with Warsh lately making a case for lower interest rates, in part due to optimism that AI will raise potential growth and cool inflation*. For the time being, the FOMC looks happy to leave rates on hold, but Warsh could build consensus to ease policy later this year should inflation start to slow, and we expect one or two more rate cuts from the Fed*. Otherwise, Warsh opposed Fed purchases of government bonds after the financial crisis and maintains this view that the central bank should not hold large quantities of government securities*. In practice, shrinking the Fed's balance sheet could be challenging given that the withdrawal of this liquidity might spark volatility in short-term money markets, in our view.
   
• Don't lose track of fundamentals – Markets are naturally focused on the Fed chair announcement and what this might mean for U.S. monetary policy. However, we will only get a true sense of Warsh's views, leadership style, and influence over the Fed when he takes up his position in the summer, in our view. Moreover, we think that the growth and inflation backdrop will remain critical in determining the Fed's next steps. This morning's PPI data for December pointed to some ongoing pipeline pressure from tariffs in segments of goods prices, and suggest that firms are becoming more inclined to pass these on to consumers to protect margins*, both of which point to continued short-term inflation pressures, in our view. Meanwhile, earnings season remains in full swing, with markets focusing on signals around AI investment from the mega-cap technology companies and the health of earnings across broader swaths of the economy*. Finally, the government is on track to shutdown tomorrow, although signs of a deal between President Trump and Democrats suggests this is likely to be short lived, in our view*. While the news flow has been relentless, we remain focused on the fundamentals around growth and corporate earnings and continue to favor a diversified exposure to U.S. large-cap and mid-cap equities, international mid- and small-cap equities, and emerging-market stocks too.

James McCann;
Investment Strategy

^{Source: *Bloomberg}

Thursday, 1/29/2026 p.m.

• Stocks pull back as tech weakens- Most major equity indexes ended lower for the day following mixed tech results and ongoing geopolitical uncertainty amid threats of military strikes in Iran*. Three of the “Magnificent 7” reported last night—Meta, Microsoft and Tesla—with Apple set to release earnings after the close today. Meta shares rose 10% after the company raised its revenue outlook alongside higher AI spending*. In contrast, Microsoft fell 10% as elevated investment coincided with slowing cloud‑revenue growth*. Elsewhere, commodities experienced some volatility. WTI crude rose more than 3% to $65 a barrel after the White House warned Iran to accept a nuclear deal or face potential military action, raising concerns about potential disruptions to Middle East oil flows*. Geopolitical tension initially lifted precious metals, with gold climbing above $5,500 an ounce and silver jumping more than 6% before giving back most of these gains*.
   
• AI trends under the microscope - Last night brought the first wave of major tech earnings, with investors focused on results, guidance, and AI spending as a key market driver. Performance was mixed*. Microsoft lagged as higher spending and slowing cloud‑sales growth weighed on results, while Meta stood out with stronger‑than‑expected AI investments supported by an improved revenue outlook*. Tesla’s main highlight was its shift toward autonomous vehicles and robotics*. A clear theme is emerging, in our view. Companies are ramping up AI‑related infrastructure spending, and markets are rewarding those that can turn these investments into earnings*. Firms without a clear monetization path are facing more scrutiny. More broadly, the tech sector is still expected to deliver strong profit growth in the S&P 500, with AI remaining an important catalyst*. However, that growth is slowing from earlier quarters even as other sectors accelerate, supporting what we see as this year’s key theme: a broadening of market leadership*.
   
• Fed likely positions for an extended pause - Yesterday’s Fed meeting was relatively uneventful, with the central bank leaving its policy rate unchanged at 3.5%–3.75%, as widely expected*. After cutting rates at the prior three meetings, the Fed now appears prepared to move to the sidelines as risks to both sides of its mandate—inflation and employment—are receding*. The policy statement noted solid economic growth and signs of stabilization in the labor market*. In our view, the updated language suggests no urgency for another near‑term rate cut, and we do not expect further action under Chair Powell. That said, we believe the Fed’s easing bias remains. As the inflationary effects of tariffs fade by midyear, the Fed is likely to resume cutting, with one or two additional cuts as our base case. An extended pause may also lend support to the weakening dollar and help keep the 10‑year Treasury yield anchored, potentially in the upper half of our 4%–5% range. For equities, the implications are limited, in our view. Stocks continue to benefit from rising earnings, solid economic growth, and supportive financial conditions, but high expectations may trigger periodic setbacks.

Angelo Kourkafas, CFA;
Investment Strategy

^{Source: *Bloomberg}

Wednesday, 1/28/2026 p.m.

• Markets edge lower on Fed Day – Equity markets finished modestly lower on Wednesday as the Fed held rates steady, as expected*. The S&P 500 briefly reached 7,000 for the first time before pulling back*. The energy and technology sectors led gains, while interest-rate-sensitive real estate companies lagged*. Bond yields rose, with the 10-year Treasury yield at 4.24%*. In international markets, Asia finished higher overnight, while Europe was down*. The U.S. dollar advanced versus major currencies — following softening in recent days — likely benefiting from comments from Treasury Secretary Scott Bessent today that the U.S. will not intervene to support the Japanese yen*. In commodities, WTI oil traded higher, likely driven by a weaker dollar and severe weather in the U.S. that is impacting output*.
   
• Fed holds rates steady, as expected – The Federal Open Market Committee (FOMC) concluded its January meeting today, deciding to maintain the federal funds target range at 3.5%-3.75%*. The FOMC statement noted that the unemployment rate shows signs of stabilization, while inflation remains elevated**. After three consecutive rate cuts in late 2025, the Fed appears poised to adopt a more patient stance***. The Fed's preferred inflation gauge — the Personal Consumption Expenditure (PCE) price index — has moderated to 2.8%* but remains above the 2% target, and the pace of disinflation has slowed. In our view, monetary policy appears close to neutral, generally estimated to be roughly 0.75%‒1% above inflation****. We expect the Fed to pause for at least a few months before considering additional cuts. In our view, a stabilizing labor market —characterized by a slow pace of both hiring and layoffs — should help keep the Fed on track for one or two more rate cuts later this year, assuming inflation continues to moderate.
   
• Earnings season in full swing – Fourth-quarter earnings season hits its stride this week, with Magnificent 7 companies Meta Platforms (Facebook), Microsoft and Tesla scheduled to report after market close today, followed by Apple on Thursday*. Earnings for S&P 500 companies are expected to rise about 9.6% year-over-year for the fourth quarter, led by the technology sector with over 25% growth*. Earnings growth is expected to broad-based as well, with eight of the 11 sectors forecast to report higher earnings*. We expect expansive earnings growth to support a broadening of market leadership. Robust profit growth is expected to accelerate through 2026, with estimates calling for a roughly 14% rise in earnings*. With valuations elevated relative to history*, we believe continued earnings growth will be a key element for further stock‑market gains in 2026.

Brian Therien, CFA;
Investment Strategy

^{Source: *FactSet **U.S. Federal Reserve ***CME FedWatch ****Federal Reserve Bank of New York}

Tuesday, 1/27/2026 p.m.

• Stocks trade mostly higher with earnings in focus – U.S. equity markets traded mostly higher on Tuesday, with investors digesting a busy week of corporate earnings.* The Dow was the lone major average to close lower, weighed down by shares of UnitedHealth Group, which came under pressure following an announcement from the Centers for Medicare and Medicaid Services that Medicare Advantage payment rates will rise by only 0.09% in 2027.* Tariff policy was in the headlines again on Tuesday after U.S. President Donald Trump threatened to raise the tariff rate on select imports from South Korea from 15% to 25%, citing delays in the country’s government in approving the U.S.–South Korea trade deal announced last summer.* However, the market impact was limited, with South Korea’s KOSPI gaining nearly 3% overnight.* On the economic front, the Conference Board's Consumer Confidence Index fell to 84.5 in January, the lowest reading since May 2014, with uncertainty in Washington, inflation, and labor‑market concerns cited as drivers of the pessimism in the survey’s write‑in responses.* In currency markets, the ICE U.S. Dollar Index was lower again on Tuesday, falling by roughly 1% and now down more than 3% since January 19.* Bond yields closed little changed, with the 10‑year Treasury yield finishing around 4.23% and the 2‑year yield at 3.57%.*
   
• Fed expected to hold rates steady – In addition to a busy week of corporate earnings, the first FOMC meeting of the year concludes tomorrow, with markets expecting the Fed to hold its policy rate steady at 3.5%–3.75%.* Recent economic data has been solid, with the Atlanta Fed’s GDPNow tracker projecting fourth‑quarter growth of over 5%.* Labor‑market data has also shown signs of stability, with initial jobless claims averaging just 202,000 over the past month and the unemployment rate declining to 4.4% in December, although job growth remains slower compared with recent years.* With the economy on strong footing, the Fed is likely in no rush to cut rates, with markets currently expecting the Fed will deliver its first interest‑rate cut of 2026 in June, followed by one additional cut in December.** Encouragingly, despite healthy economic activity, inflation has continued to trend lower, with core CPI rising 2.6% year‑over‑year in December and just 0.2% on a monthly basis.* In our view, inflation is likely to remain in the 2.5%–3% range in 2026, which we believe will pave the way for an additional 1–2 interest‑rate cuts from the Fed.*
   
• Earnings season in full swing — Corporate earnings are in focus Tuesday, with 20 companies in the S&P 500 announcing results today and more than 90 scheduled to report over the course of the week.* The industrials sector saw several announcements, with United Parcel Service, Raytheon Technologies and General Motors announcing better-than-expected earnings, supporting shares on Tuesday.* Within the health care sector, despite reporting results that were largely in line with expectations, shares of health insurer UnitedHealth Group—along with other health insurers—were under pressure on Tuesday following an announcement from the Centers for Medicare and Medicaid Services that Medicare Advantage payment rates will rise by only 0.09% in 2027, well short of market expectations,* and potentially pressuring insurer profitability. At the index level, estimates call for roughly 7% earnings growth for the S&P 500 in the fourth quarter, which would bring the annual growth rate to just over 11% for 2025.* Encouragingly, strong profit growth is expected to continue in 2026, with estimates calling for S&P 500 earnings growth of nearly 15%, and all eleven sectors projected to see positive results.* In our view, a steady economic backdrop paired with strong productivity trends should pave the way for another year of solid earnings growth in 2026, helping to support the ongoing equity bull market.

Brock Weimer, CFA;
Investment Strategy

^{Source: *FactSet **CME FedWatch Tool}