Market View: Week of Jan. 23, 2026
ECONOMIC REVIEW¹
The World Economic Forum in Davos wrapped with a focus on global uncertainty, Artificial Intelligence (AI) disruptions, and efforts to rebuild trust across economies.
The first revision of Q3 gross domestic product (GDP) showed the U.S. economy expanded slightly more than initially reported, with real GDP growth revised to 4.4% (from 4.3%), the fastest pace in two years. The upward revision was driven by stronger exports and a smaller drag from inventories, while consumer spending held firm at a 3.5% annualized pace.
November PCE inflation was in-line with expectations, rising 0.2% month-over-month, matching estimates and October's pace. The inflation backdrop remains persistent, with PCE running at 2.8% year-over-year, signaling ongoing price pressures even as the monthly trend stayed controlled.
Core PCE, the Federal Reserve’s (Fed) preferred inflation measure, also met expectations, increasing 0.2% month-over-month, consistent with a moderate but still elevated inflation trend. Year-over-year, core PCE held at 2.8%, still well above the Fed's 2% target, reinforcing the view that inflation remains sticky and supporting the case for a cautious approach by the Fed.
Consumer sentiment improved to 56.4 in January from 52.9 in December, reflecting a modest pickup in household confidence. Despite the rebound, sentiment remains over 20% lower than this time last year, reflecting ongoing pressure on purchasing power from elevated prices and concerns about a potential softening in the labor market.
How does the most recent economic data impact you?
The latest data reinforces that economic growth remains durable and consumer demand is still doing the heavy lifting, with Q3 activity revised slightly higher and real consumer spending continuing to rise into the start of the holiday season, helping to support the outlook for corporate revenues and earnings.
Inflation remains modestly elevated, which keeps interest rates and Fed policy in the driver's seats from the market as core PCE remained firm and policymakers are expected to hold rates steady next week and stay cautious given lingering inflation risks.
Consumer sentiment is improving month to month, but points to a more selective consumer, meaning pricing power and execution will likely matter more for companies than a simple rising tide lifts all boats environment
A LOOK FORWARD¹
This week, investors will be tuned into the Conference Board Consumer Confidence survey, the Fed’s next interest rate decision, and the latest Producer Price Index data.
How does this week’s slate of economic data impact you?
This week's data will provide timely insights on whether the US economy is maintaining strong momentum, whether inflation pressures are continuing to cool, and how the Fed may position its future policy decisions.
MARKET UPDATE²
| Market Index Returns as of 1/23/2026 | WTD | QTD | YTD | 1 YR | 3 YR | 5 YR |
|---|---|---|---|---|---|---|
| S&P 500 | -0.34% | 1.10% | 1.10% | 14.80% | 21.57% | 14.14% |
| NASDAQ | -0.06% | 1.13% | 1.13% | 18.54% | 28.45% | 12.48% |
| Dow Jones Industrial Average | -0.50% | 2.23% | 2.23% | 12.43% | 15.50% | 11.77% |
| Russell Mid-Cap | -0.45% | 4.26% | 4.26% | 9.98% | 13.74% | 8.73% |
| Russell 2000 (Small Cap) | -0.32% | 7.58% | 7.58% | 17.24% | 13.90% | 5.65% |
| MSCI EAFE (International) | 0.14% | 3.60% | 3.60% | 30.19% | 15.53% | 9.16% |
| MSCI Emerging Markets | 1.09% | 6.93% | 6.93% | 40.76% | 15.76% | 4.01% |
| Bloomberg US Agg Bond | 0.07% | 0.08% | 0.08% | 7.29% | 3.62% | -0.20% |
| Bloomberg High Yield Corp. | 0.10% | 0.67% | 0.67% | 8.09% | 8.98% | 4.55% |
| Bloomberg Global Agg | 0.46% | 0.14% | 0.14% | 7.82% | 2.81% | -1.98% |
OBSERVATIONS
Major U.S. large cap indices finished the week lower once again, with the S&P 500 down -0.34%, the Dow down -0.50%, and the Nasdaq essentially flat -0.06%.
The pullback was broad but modest, as both mid-caps -0.45%, and small caps -0.32% also finished slightly lower on the week.
International markets showed relative strength, and both developed international markets (MSCI EAFE), up +0.14%, and emerging markets up +1.09%, continuing the theme of improved diversification benefits.
Fixed Income delivered modest gains, as the Bloomberg U.S. Aggregate Bond index rose +0.07%, and high yield advanced +0.10%, providing some stability despite equity volatility. Global bonds outperformed, as the Bloomberg Global Aggregate advanced +0.46%, underscoring improving bond performance as rate expectations stabilize.
BY THE NUMBERS
Wikipedia Turns 25
Wikipedia just turned 25 years old, hitting the milestone on January 15th, 2026, and it's still one of the few massive Internet platforms that runs with zero ads. Even in an era dominated by algorithms and Artificial Intelligence (AI), Wikipedia pulled in an astonishing 27-billion-page views in December, powered by roughly 7 billion unique visitors, nearly the scale of the entire global population. Its reach has been enormous for years. In 2020, Guinness recognized Wikipedia as the world's largest encyclopedia when it crossed 50 million articles across all languages. But the story is shifting, with human readership down 8% as AI tools increasingly summarize information without sending users to the source. At the same time, Wikipedia is seeing the opposite trend in the background. AI-related bot traffic is surging, putting new strain on the same infrastructure that quietly supports billions of visits every month.3
Davos 2026
More than 60 heads of state, a record 400+ political leaders, and 830 CEO's and Chairs gathered at Davos 2026 under the theme “A Spirit of Dialogue. The week's big message was that the world is moving toward a more fractured, higher-stakes global order, one in which systemic fault lines and geopolitical tensions are no longer background noise but central investment and policy realities. President Trump used his special address to emphasize a strong Europe, arguing that energy, trade, immigration, and growth must be priorities for the West, while also softening his stance on Greenland, saying he wouldn't use excessive force. Across the agenda, leaders stressed that resilience now means grappling with worsening inequality, heavier debt burdens, and rising energy security risks alongside climate pressures. AI was a constant conversation, including a warning that roughly 40% of jobs globally could be impacted in the next few years and 60% in advanced economies, making adaptation and social cohesion just as important as economic growth.4
Data obtained from Bloomberg as of 1/23/2026.
2 Data obtained from Morningstar as of 1/23/2026.
3 Wikipedia turns 25 | pcgamer.com
8736222