Markets finished a short but eventful week slightly lower as geopolitical tensions and renewed tariff rhetoric pressured sentiment early on. As the week progressed, constructive economic data helped stabilize markets and limit losses.
The Numbers
- S&P 500: −0.35%
- Nasdaq: −0.06%
- Dow Jones Industrial Average: −0.53%
- MSCI EAFE: +0.91%
U.S. equities slipped modestly, while developed international markets outperformed despite global headline risk.
Source: YCharts.com, January 24, 2026. Weekly performance is measured from Friday, January 16, to Friday, January 23. TR = total return for the index, which includes any dividends and cash distributions during the period. Treasury note yield is expressed in basis points.
What Happened
Early Week: Tariff Talk
Markets opened lower Tuesday after the White House threatened new tariffs on European Union nations following an international dispute involving Greenland. The S&P 500 and Nasdaq fell more than 2% intraday, with the Dow also under pressure.
Mid-Week: Rhetoric Cools
Sentiment improved Wednesday after U.S. officials signaled a more diplomatic approach toward Greenland. By the close, the White House walked back its tariff threats and announced progress toward a negotiated framework, easing investor concerns.
Late Week: Economic Support
On Thursday, markets accelerated higher following a modest upward revision to third-quarter GDP and lower-than-expected weekly jobless claims—signals that economic momentum remains intact.
Stocks moved sideways Friday as investors looked ahead to a heavy earnings calendar and the first Federal Reserve meeting of 2026.
Eye-Catching Small Caps
For 14 consecutive trading sessions through Thursday, January 22, small-cap stocks outperformed large caps, with the Russell 2000 beating the S&P 500—an occurrence not seen since May 1996. The streak ended Friday.
Historically, small caps tend to outperform when interest rates are falling. However, the 10-year Treasury yield has been trending higher since late October, creating a more challenging backdrop for sustained small-cap leadership.
What We’re Watching
Geopolitical Risk vs. Economic Reality
Markets continue to react sharply to geopolitical headlines, but economic fundamentals—growth, employment, and consumer resilience—remain supportive.
Interest Rates and Leadership
Rising long-term yields may influence which segments of the market lead in the months ahead, reinforcing the importance of diversification.
This Week’s Critical Data
- Wednesday: Federal Reserve Interest Rate Decision; Chair Powell Press Conference
- Friday: Producer Price Index (PPI) – December
These releases will shape expectations around inflation trends and the Fed’s policy path early in 2026.
* indicates publication of a report delayed by the government shutdown in October and November
Source: Investors Business Daily – Econoday economic calendar; January 23, 2026. Forecasts are subject to revision and may not materialize.
As always, if you have any questions about your portfolio or want to discuss your strategy, please don’t hesitate to reach out.
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Footnotes And Sources
WSJ.com, January 23, 2026
Investing.com, January 23, 2026
CNBC.com, January 20, 2026
CNBC.com, January 21, 2026
WSJ.com, January 22, 2026
CNBC.com, January 23, 2026
WSJ.com, January 22, 2026
IRS.gov, July 18, 2025
Cleveland Clinic, August 25, 2025
