General Market News

U.S. airline stocks are showing signs of recovery as several major carriers prepare to report earnings this week, with investors cautiously optimistic after 2025's disappointing performance due to macro headwinds. Alaska Airlines impressed analysts despite missing Q4 revenue expectations, prompting four firms to raise price targets, while JetBlue, American Airlines, and Southwest are set to report results that will test whether the industry can sustain recent momentum.

• Alaska Air Group received a $77 price target from UBS (50%+ upside potential) based on strong 2026 guidance showing Q1 corporate bookings up 20% year-over-year, despite missing Q4 revenue expectations by $10 million
• Southwest Airlines outperformed peers with 30% stock gains over 12 months, while Alaska fell 26% and JetBlue dropped 33% in the same period, though most carriers rebounded 12-15% in the last six months
• JetBlue and American Airlines report Tuesday with analysts expecting JetBlue losses of $1.61 per share for 2025 and American showing minimal 1% revenue growth, while Southwest reports Thursday with more positive forecasts

U.S. business borrowing for equipment purchases increased 5.9% year-over-year in December, reaching $10.6 billion and the second-highest level on record, according to the Equipment Leasing and Finance Association. The data suggests strong demand despite economic uncertainty, with industry confidence reaching an 11-month high in January.

• December equipment financing totaled $10.6 billion on a seasonally adjusted basis, up 5.9% from a year earlier and representing the second-highest level ever recorded
• The ELFA confidence index jumped to 64.6 in January from 58.3 in December, an 11-month high, with readings above 50 indicating positive business outlook
• ELFA expects continued strong demand and stable financial conditions in 2026, particularly as markets anticipate additional interest rate cuts later this year

US equity markets recovered from midweek volatility triggered by President Trump's Greenland annexation push and EU tariff threats, with tech stocks leading the rebound as earnings season accelerates. The S&P 500 is showing 8.2% EPS growth for Q4 2025 with 13% of companies reporting, marking the 10th consecutive quarter of year-over-year earnings growth. Major tech earnings from Microsoft, Apple, and Alphabet this week will be critical for determining if markets can break their two-week losing streak.

• Technology sector drove the recovery despite Intel falling 16% on weak outlook, with Nvidia gaining on reports of Chinese chip orders and Netflix crossing 325 million paid subscribers while forecasting $50 billion in 2026 revenue
• 75% of S&P 500 companies have beaten EPS estimates so far, though below historical averages as analysts uncharacteristically raised expectations ahead of the season; J.P. Morgan forecasts 13-15% earnings growth for the next two years driven by an 'AI supercycle'
• Six S&P 500 companies reporting this week have confirmed outlier (later than usual) earnings dates, typically a negative signal: Union Pacific, NextEra Energy, Texas Instruments, UnitedHealth Group, and American Express, with only Regeneron Pharmaceuticals reporting earlier than historical norms

Despite popular assumptions, AI spending was not the primary driver of U.S. economic growth in 2025, according to recent economic analyses. Consumer spending remained the most crucial contributor to GDP growth, with AI-related capital expenditures ranking second. When adjusted for imports of AI-related equipment, AI's net contribution to GDP growth was approximately 20-25%, far less than widely believed.

• AI-related investments contributed 40-50 basis points (0.4-0.5%) to real GDP growth on average between Q1-Q3 2025 after adjusting for imports, representing about 20-25% of total growth rather than being the dominant factor
• Software and computer investments were AI's most important GDP contributions in 2025, not data centers despite their significant headline attention and capital deployment
• Without the AI boom, U.S. GDP growth would still have been 'decent, above 1.5%' due to solid personal consumption, which continues to be supported by fiscal policy and resilient consumer financial health heading into 2026

The S&P 500 and Nasdaq Composite rallied to their highest levels since January 15 on Monday, driven by gains in tech and communications stocks as investors positioned ahead of major earnings reports from Apple, Meta, Microsoft, and Tesla on Wednesday. The market is focused on whether AI-driven enthusiasm has translated into actual earnings results, with a Federal Reserve policy decision also expected mid-week.

• Communications Services led all sectors with a 1.77% gain, while Technology rose 1.01%, with Apple and Meta each climbing over 2%
• Of the 64 S&P 500 companies reporting earnings as of Friday, 79.7% beat analyst expectations, setting a positive tone for upcoming megacap reports
• The Fed is expected to hold rates unchanged on Wednesday, with investors focused on Chairman Powell's comments regarding the timing of the first 2026 rate cut

Bridgewater Associates' co-CIOs warned that exponential AI spending by large corporations will reshape the economy, driven by competitive pressures forcing companies to match rivals' investments or risk falling behind. The surge in capital expenditure across the AI supply chain has fueled equity market rallies, but Bridgewater cautions this could increase inflation and create bubble-like conditions.

• Game-theoretic competition compels companies to aggressively increase AI capital expenditure, as falling behind rivals by even a few months is unacceptable
• Surge in AI spending could drive inflation by pushing up prices of ecosystem components like chips and electricity
• Easy monetary policy risks accelerating speculative market activity and creating conditions ripe for a bubble or cyclical overheating

The S&P 500 rose 13.3% during the first year of President Trump's second term, marking the weakest first-year presidential performance in two decades since George W. Bush's second term in 2005. The tepid growth is attributed to economic uncertainty driven by Trump's volatile tariff policies, despite following back-to-back years of 20%+ gains. International stocks outperformed U.S. markets for the first time in years amid the heightened volatility.

• The 13.3% S&P 500 gain significantly trails Trump's first-term start of 24.1% in 2017, when the index hit 62 record highs compared to just 39 in 2025
• Market volatility spiked repeatedly due to Trump's shifting tariff announcements, with the VIX 'fear gauge' surging above 50 for the first time since the pandemic during the Greenland standoff
• Despite the slower growth, 2025 marks three consecutive years of strong gains, and Wall Street expects the S&P 500 to continue rising through 2026

US stocks opened modestly higher on Monday, with the S&P 500 up 0.2% and the Dow gaining 0.4%, as investors positioned ahead of the Federal Reserve's first policy meeting of 2026 and a packed earnings calendar. More than 90 S&P 500 companies are set to report this week, including Apple, Tesla, Meta, and Microsoft. Political uncertainty over potential government shutdown and immigration policy added to market caution.

• About 76% of companies reporting earnings this season have beaten expectations according to FactSet, though not all positive surprises have been rewarded by investors
• Gold surged to a new all-time high above $5,100 per ounce as safe-haven demand increased amid political and fiscal uncertainty in the US
• The Fed is widely expected to leave rates unchanged on Wednesday, but investors will closely watch commentary for signals on timing and pace of future rate cuts

Small-cap stocks, measured by the Russell 2000 Index, are outperforming large-caps in 2026, up over 7% while the S&P 500 remains range-bound near 2025 levels. The Russell 2000 has hit all-time highs despite component short interest reaching multi-year peaks, creating a potential bullish contrarian signal. Market breadth is improving as investors rotate $71 billion into equities from money market funds, suggesting opportunity costs for those avoiding small-caps.

• Russell 2000 gained 7%+ in 2026 and set record highs, while S&P 500 has traded in a tight 6,770-6,920 range with no progress since late October
• Short interest on Russell 2000 components reached multi-year highs, indicating potential short covering could fuel further rallies as bears are caught 'flat-footed'
• Global equity funds saw $71 billion in inflows last week (35x the prior week), with $62 billion moving out of money market funds in the third-largest such shift on record

U.S. core capital goods orders rose 0.7% in November, exceeding the 0.3% forecast and signaling sustained business equipment spending growth in Q4. The stronger-than-expected data, combined with robust consumer spending, supports the Atlanta Fed's projection of 5.4% annualized GDP growth for the fourth quarter.

• Non-defense capital goods orders excluding aircraft (core orders) increased 0.7% in November versus 0.3% economist forecast, with October revised down to 0.3% from 0.5%
• Core capital goods shipments rose 0.4% after an 0.8% gain in October, indicating steady business investment in equipment
• The data release was delayed by a 43-day federal government shutdown and follows strong consumer spending reports for October and November

U.S. companies reporting early earnings indicate that tariffs are squeezing profit margins as consumers resist further price increases amid already elevated costs. Major firms including Procter & Gamble, 3M, and Fastenal have flagged tariff impacts, with the effective tariff rate reaching 14.4% as of mid-November, the highest in 85 years. Over 100 S&P 500 companies are set to report results this week, with tariff-related pricing strategies and margin pressures under scrutiny.

• Tariffs have increased domestic goods prices by 4.3 percentage points and imported goods by 5.8 percentage points compared to pre-tariff levels, according to Harvard researchers tracking 360,000 products.
• Procter & Gamble raised U.S. prices 2% to 2.5% to offset tariffs but reported a fifth consecutive quarterly margin decline, while McCormick saw gross margins drop 130 basis points year-over-year.
• Amazon CEO noted 'lower pricing' on the e-commerce platform as sellers deplete inventories brought in to front-run tariffs, while companies like Tractor Supply plan 'surgical' price increases given value-focused consumer behavior.

Financial analyst Ken Fisher predicts the stock market bull run will continue in 2026 with more modest gains after 2025's strong performance, where world stocks rose 21% and European markets surged 35%. He forecasts a choppy year with returns above 10% but below the 23% bull market average, driven by favorable lending conditions and the typical midterm election pattern. Fisher advises patience as early-year political headwinds should transition to tailwinds by Q4.

• The S&P 500 has gained 86% since 2022's end, with 35 of 47 nations in MSCI's All-Country World Index hitting record highs in 2025, demonstrating the rally extends well beyond U.S. tech stocks
• Professional forecasters cluster around a median prediction of 9.6% U.S. stock gains for 2026, but Fisher argues this consensus rarely materializes and fundamentals support above-10% returns instead
• Midterm election years typically see choppy markets in the first three quarters, then stocks rise in 84% of Q4s (averaging 6.4% gains) as increased gridlock reduces legislative uncertainty

London's FTSE 100 and FTSE 250 indices traded flat on January 26 amid geopolitical tensions from Trump's tariff threats and fresh Iran sanctions. While industrial and travel stocks fell on rising oil prices and uncertainty, precious metal miners hit record highs, gaining 3.6%. British banks HSBC and NatWest are expected to raise profit targets when reporting earnings in coming weeks.

• Industrial stocks fell 1.4% and travel/leisure dropped over 1%, pressured by geopolitical worries including Trump's Greenland-linked tariff threats and new U.S. sanctions on Iran
• Precious metal miners surged 3.6% to record highs while industrial metal miners climbed 0.9%, buoyed by optimism in commodities outlook
• Spire Healthcare jumped 16% after announcing it would 'explore strategic options' with potential buyers including Bupa and Triton Partners

Germany's savings banks association DSGV forecasts 1% GDP growth in 2026, marking a modest rebound after three years of economic stagnation. The projection reflects early positive impacts from infrastructure, climate, and defense spending, though officials warn the recovery remains fragile amid global tensions.

• Public financing for infrastructure, climate, and defense is expected to contribute 0.4 percentage points to 2026 growth, rising to 0.5 percentage points in 2027
• DSGV President Ulrich Reuter characterized 2026 as a potential turning point and urged Germany to pursue new trade partnerships amid widening global tensions
• The association supports the Mercosur trade deal as critical for creating a free-trade area of over 700 million people, warning failure would be a 'bitter blow'

Britain's labour market continued to weaken in December 2024, with job vacancies falling for the sixth consecutive month to 716,791, down 15% year-over-year to the lowest level since the 2020 COVID-19 pandemic. Advertised salary growth also slowed to 6.8% from 7.7% in November, signaling reduced wage pressure that the Bank of England is monitoring as it considers interest rate cuts.

• Job vacancies dropped from 745,448 in November to 716,791 in December, marking a 15% annual decline and the weakest full year since 2020
• Advertised salary growth decelerated to 6.8% year-over-year from 7.7% in November, indicating easing wage inflation pressure
• The CBI's growth indicator improved slightly to -20 from -30, but overall business sentiment remains cautious with confidence described as 'fragile'

The Russell 2000 small-cap index has surged approximately 8% since the start of 2026, outpacing the S&P 500 as investors rotate away from potentially overvalued AI and large-cap stocks. Analysts attribute the rally to expected Federal Reserve rate cuts, seasonal factors including the 'January Effect', and improving fundamentals for small-cap companies.

• Small-cap stocks are trading at a roughly 30% discount to large caps on a forward P/E basis, while small-cap earnings growth has surpassed larger companies for the first time in over three years
• Expected Federal Reserve rate cuts would particularly benefit smaller companies due to their heavier reliance on borrowing compared to large-cap peers
• Historical patterns suggest small caps tend to outperform in February, especially during midterm election years like 2026, supporting analyst projections for continued upside

Market strategist Chris Vermeulen warns that U.S. equities and precious metals are approaching a significant correction within weeks, despite trading near all-time highs. Technical indicators show exhaustion patterns similar to past market tops, with weakening leadership from mega-cap technology stocks and the Magnificent 7 moving sideways with bearish characteristics.

• S&P 500 has limited upside of roughly 4.5% to resistance near 7,225, but could retreat 1-2% before finding support in the near term
• The Magnificent 7 stocks are losing momentum and showing bearish patterns, undermining broader indices like the Nasdaq and signaling waning investor enthusiasm
• Previously speculative assets like Bitcoin have already lost momentum, with capital rotating away from growth equities toward precious metals, which themselves face risk of a blow-off peak

Gold prices reached a new all-time high above $4,900 in January 2026, approaching the psychologically significant $5,000 mark. The article examines different investment vehicles for gold exposure, comparing physical gold ETFs like SPDR Gold Shares (GLD) against higher-risk gold mining stocks and miner-focused ETFs such as VanEck Gold Miners ETF (GDX) and VanEck Junior Gold Miners ETF (GDXJ). Investors must choose between stable exposure through physically-backed ETFs or leveraged returns through mining equities that offer operating leverage but carry execution and operational risks.

• Gold hit an all-time high above $4,900 on January 22, 2026, driven by inflation concerns, currency devaluation fears, and supportive monetary policy continuing from 2025
• Mining stocks and miner ETFs can outperform physical gold during bull markets due to operating leverage, but carry added risks including cost inflation, operational setbacks, and political or environmental challenges
• Physically-backed gold ETFs like SPDR Gold Shares offer deep liquidity, tight spreads, and low costs for investors seeking a pure hedge, while diversified miner ETFs like GDX and GDXJ provide equity-driven exposure with higher volatility

President Donald Trump threatened to impose a 100% tariff on all Canadian goods if Prime Minister Mark Carney completes a trade deal with China. Trump warned that China might use Canada as a 'drop off port' to circumvent U.S. tariffs. This reverses Trump's support from just a week earlier when he endorsed Canada's preliminary deal with China.

• Canada and China reached a preliminary agreement allowing up to 49,000 Chinese EVs into Canada at a 6.1% tariff rate, while China would lower tariffs on Canadian canola seed to approximately 15%
• Trump reversed his position within one week, having previously stated on Jan. 16 that 'If you can get a deal with China, you should do that'
• The threat follows Carney's address at the World Economic Forum where he urged 'middle powers' to resist economic coercion from superpowers

The 2026 World Economic Forum in Davos was defined by a sharp contrast between optimism about AI moving into production and anxiety over geopolitical uncertainty. Trump's remarks about acquiring Greenland jolted investors, followed by Musk's vision for robotaxis and AI that refocused attention on technology. Leaders emphasized that investing in 2026 will be 'conviction-driven' as geopolitics, rather than technology, becomes the primary source of uncertainty.

• Trump's Greenland acquisition comments shifted the mood from AI infrastructure discussions to concerns about trade leverage and political risk, with attendees expressing unease over unpredictable policy shifts
• Musk predicted Tesla's driverless robotaxis would be 'very, very widespread' in the U.S. by end of 2026 and that AI could surpass human intelligence in 2026, resetting focus back to data centers and energy demand
• Investment leaders described the environment as 'fragmented' requiring 'conviction-driven' capital deployment, with finance ministers emphasizing that geopolitical uncertainty is now the top economic risk