Monthly Market Commentary – January 2026

By Dennis Karpenko, CFA

January kicked off 2026 with a fairly volatile stretch for financial markets, globally. Overall, a higher risk appetite for investors has benefited global equities, but kept global fixed income muted. The general theme of economic uncertainty has persisted from last year, now becoming even more pronounced as geopolitical risks have further increased to open the year.

Equities

Equities saw a widespread broadening to start the year; although they were positive, U.S. large caps were eclipsed by U.S. small caps as well as international stocks. Emerging markets had a ‘near 9%’ return in January, with developed international and U.S. small caps both up just over 5%. The S&P 500, NASDAQ 100, and DJIA all had returns between 1.2% and 1.5%.

The broadening of markets has extended into sectors as well. U.S. Tech, which has been one of the preeminent leaders in years past, was flat for the month while Energy, Materials, and Consumer Staples led all sectors (up 14%, 8%, and 7% respectively). Across the board, equity performance has largely been driven by earnings rather than valuation expansion.

Fixed Income

Bonds, as measured by the Global Aggregate Index, were largely flat in January. Fixed income moved minimally against a backdrop of higher-than-expected economic activity. U.S. Treasuries in particular saw a drop in performance, turning negative on the front end of the curve. Simultaneously, concerns pertaining to the Fed’s ability to combat inflation have contributed to a decline in the U.S. dollar compared to many foreign currencies.

Economic Recap

The Fed’s first meeting in 2026 resulted in no adjustment to rates, falling in line with consensus predictions. There are now two more meetings prior Fed Chair Jerome Powell’s term concluding in May; it is expected that there will be another candidate nominated to take his place. Currently, President Donald Trump has indicated that he plans to nominate former Member of the Federal Reserve Board of Governors, Kevin Warsh.

Other notable economic figures:

Disclosures

Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

The market indexes discussed are unmanaged and generally considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks, including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Please consult your financial professional for additional information.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.