January 26, 2026

“The investor’s chief problem—and even his worst enemy—is likely to be himself.” Emotions often derail rational decision-making.

Benjamin Graham

Despite a strong finish last Friday all the major markets were a bit off last week. Here are the numbers. The S&P 500 surrendered .70%, the Dow Jones Industrial Average lost .74%, the Nasdaq, not as bad, gave back .59%. Internationally the FTSE 100 was off 90% and the MSCI-EAFE, the only winner, up.13%. The 2-year rose with a yield of 3.598% and the 10-year paid 4.231%.

So, what happened?  As Barrons Alex Rule reports, we had a “glittering finish last week. A volatile week for stocks ended with the major indexes essentially flat. The S&P 500 finished the week down while the Nasdaq Composite was off. The Dow Jones Industrial Average, which swung 1,179 points from its low on Tuesday to its high on Thursday, finished the week down 260 points. On the year, the three indexes are still up at least 1% each. While stocks ended where they began, the real action came in precious metals, with investors rushing to gold and silver amid an increasingly uncertain geopolitical environment. Both of the metals had their largest ever weekly dollar gains on record, with gold up $388 an ounce to $4,976.20 and silver rising nearly $13 to $100.93.”

And the Federal Reserve looking forward this week? Despite the “Snowmagddon” hitting the Central, mid-Atlantic and Northeast States, life will go on as the Federal Reserve officials are expected to keep the benchmark interest rate unchanged this week, leading to debate on future cuts. The Federal Reserve lowered its benchmark rate by 75 basis points across three meetings late last year, reaching a range of 3.5%-3.75%. Economists are divided on future rate cuts, with some forecasting no cuts in 2026 and others expecting cuts later in the year. Federal Reserve officials have signaled clearly that they intend to leave their benchmark interest rate unchanged this week, leaving economists to debate a larger question — how long will the central bank stay on the sidelines? Expectations of quick further cuts are evaporating. Investors anticipate that the Federal Reserve will maintain current interest rates at its Jan. 27-28 meeting, with 97% certainty.

The market doesn’t see another move until July. But waiting for six months also dims the prospect of any move. “The longer they wait to cut, the higher the hurdle becomes to justify on economic grounds the need to ease further,” said Sarah House, senior economist at Wells Fargo. Fed officials will meet for two days starting Tuesday and announce a decision at 2 p.m. Eastern on Wednesday. Fed Chair Jerome Powell will follow up with a press conference half an hour later. The Fed lowered its benchmark rate by 75 basis points at three successive meetings starting in September to a range of 3.5%-3.75%.

Even though inflation remains well above the Fed’s 2% target, many Fed officials backed last year’s easing because the labor market was looking frail. Officials want to get inflation lower but not at the high cost of a recession.

On the tariff front, U.S. President Donald Trump says Canadian goods exported to the United States would be hit with 100 percent tariffs if Canada makes a deal with China. “If Governor Carney thinks he is going to make Canada a ‘Drop Off Port’ for China to send goods and products into the United States, he is sorely mistaken. China will eat Canada alive, completely devour it, including the destruction of their businesses, social fabric, and general way of life,” Trump said in a post on Truth Social on the morning of Jan. 24. “If Canada makes a deal with China, it will immediately be hit with a 100% Tariff against all Canadian goods and products coming into the U.S.A. Thank you for your attention to this matter!” Meaning we still are negotiating with Canada, but the result will end of the same despite the fireworks. The truth is the US is the majority of Canada’s economy and all it’s defense. At the risk of being an ugly American the facts are the facts.

Going forward, if equity markets are feeling left behind, next week’s 100 or so earnings reports from S&P 500 companies could bring the focus back to stocks. Among the scheduled reporters are four of the seven Mag 7 companies, including Tesla, Microsoft, and Meta Platforms all this Wednesday alone. Apple reports Thursday. All four stocks are down significantly from their recent highs, suggesting expectations might be lower than usual heading into the results. Investors will be looking for updates on capital expenditures, returns on AI initiatives, and overseas sales.

So, look for a bit more volatility as we move slowly forward until the impact of the tax cuts, new US domestic industrial investment and further tariff negotiations and review impact positively on the US markets and the stock market the rest of this year. The stock market is shifting, with cyclical sectors and value stocks outperforming growth sectors like technology in early 2026. Corporate earnings and the stable U.S. economy are currently driving investor decisions more than expectations of interest-rate cuts. This stock-market broadening has been made possible because the underlying U.S. economy has remained stable.

And the housing Market and Mortgage rates? Mortgage rates showed a slight uptick after hitting multi-year lows earlier in the period. According to Freddie Mac’s Primary Mortgage Market Survey (the standard weekly benchmark), the average 30-year fixed-rate mortgage rose to 6.09% for the week ending January 22, 2026. This was up 3 basis points (0.03%) from the prior week’s average of 6.06%, which had marked the lowest level in over three years (since around September 2022). The 15-year fixed-rate mortgage averaged around 5.44%, also up slightly. housing market side last week and into early 2026: The market continues to show signs of gradual rebalancing rather than dramatic shifts. Inventory has been rising overall (more homes listed compared to last year), which is helping to ease the extreme seller’s market conditions of prior years, though supply remains relatively tight in many areas. Home price growth is slowing or expected to be modest (e.g., forecasts like Zillow’s suggest around 1.2% rise over the next 12 months amid softer demand). Buyer activity and pending sales faced headwinds late last year (e.g., reports of declines in December pending sales), with reluctant buyers due to affordability challenges from still-elevated rates and prices. Overall, the market is described as moving toward more balance in 2026, with increasing inventory and slower price gains, but no crash—more of a stabilization. The upcoming Fed meeting (noted in mid-January updates) could influence future direction on rates and housing momentum.

Stay warm and look for weather induced lower trade volume.

Mike