A look back
- Equities had a strong start to 2026 with the S&P 500 up 1.6%, modestly ahead of international developed markets’ 1.4% gain. Small caps led the way in the U.S. with the S&P Small Cap 600 rallying 4.1%.
- Longer-dated yields declined last week as the 10-year U.S. Treasury yield closed at 4.16%. The yield curve flattened with the more policy-sensitive 2-year yield spiking after Friday’s employment report on its way to a higher weekly close around 3.53%.
- The December jobs report was the highlight of the economic calendar. The unemployment rate ticked down further than expected to 4.4%, driving short-dated yields higher. After the release, traders were pricing in just a 5% chance of a January rate cut.
A look ahead
- Fourth quarter earnings season kicks off with banks in the spotlight. The S&P 500 is expected to post 8.3% year-over-year earnings growth, which would mark the tenth-straight quarter of positive growth. Eight of eleven sectors are expected to post positive earnings growth, with technology leading the way.
- Inflation data will be the center of attention on the economic side with the Consumer and Producer Price Indices (CPI and PPI) on deck. December Retail Sales will round out a busy economic week.
- Economic releases: New Home Sales, CPI, PPI, Retail Sales, Industrial Production and Capacity Utilization, Housing Market Index.
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