General Market News

Zacks Investment Research predicts 2026 will deliver strong market gains, potentially exceeding 2025's performance, marking a fourth consecutive year of double-digit returns. The S&P 500 has posted gains of 24.2% (2023), 23.3% (2024), and 16.4% (2025), with early 2026 showing the Russell 2000 up 7.89% and the S&P 400 up 6.07% year-to-date. The outlook is driven by sustained AI demand, moderating inflation, falling interest rates, and strong earnings growth projections.

• AI demand characterized as 'insatiable' by AMD CEO Lisa Su, who projects her company could grow 35% annually for 3-5 years, with the AI data center market potentially reaching $1 trillion by 2030
• Core inflation (CPI) declined to 2.6% year-over-year from 3.3% earlier in 2025, supporting the Fed's three rate cuts last year and expectations for another cut in 2026
• Earnings growth forecasts remain strong with Q4 2025 projected at 7.9%, Q1 2026 at 11.8%, and Q2 2026 at 14.0%, demonstrating resilience despite tariff concerns
• Small-cap stocks are outperforming in early 2026 after lagging in the first half of 2025, benefiting from lower interest rates and tax provisions including 100% immediate expensing of capital expenditures

U.S. stocks ended nearly flat on Friday ahead of the Martin Luther King Jr. holiday weekend, with all three major indexes posting weekly losses as Q4 earnings season began. The S&P 500 fell 0.38% for the week despite strong bank earnings, while investors rotated from large-cap tech stocks into smaller-cap equities.

• The Dow fell 0.17%, S&P 500 dropped 0.06%, and Nasdaq declined 0.06% on Friday, with weekly losses of 0.29%, 0.38%, and 0.66% respectively
• Small-cap Russell 2000 reached a record closing high and gained 2.04% for the week as investors shifted money from heavyweight tech names to undervalued areas
• Financials posted their biggest weekly decline since October despite mostly solid bank earnings, while chip stocks rose 1.2% on Friday extending Thursday's gains

White House economic advisor Kevin Hassett proposed that U.S. banks voluntarily offer 'Trump cards' to underserved Americans with adequate income, potentially scaling back President Trump's demand for a 10% credit card interest rate cap. The proposal has received no formal discussions with major banks, who have already rejected the broader rate cap idea. This shift suggests the administration may be backing away from industry-wide changes that would require legislation.

• Trump's original demand for a 10% interest rate cap by Jan. 20 has been roundly rejected by bank executives and industry lobbyists throughout the week
• Hassett's 'Trump card' concept would narrowly target consumers who lack credit access but have sufficient income and stability to justify credit lines, potentially avoiding the need for legislation
• Major credit card issuers and bank lobbyists told CNBC they have had no discussions with the administration about the 'Trump card' concept despite claims of CEO engagement

Former Federal Reserve Governor Kevin Warsh surged to the top of prediction markets for next Fed chair after President Trump suggested Friday that he wants to keep current National Economic Council Director Kevin Hassett in his current role. Warsh's odds jumped to 59% on both Polymarket and Kalshi, while Hassett fell to 15-16%. The nomination is needed to replace Fed Chairman Jerome Powell, whose term expires in May.

• Warsh's nomination odds climbed to 59% on both major prediction markets, while Hassett dropped to 15-16% and Fed Governor Christopher Waller stands at 15%
• Trump said 'I actually want to keep you where you are' to Hassett during White House remarks, while noting 'we'll see how it all works out'
• Powell's term as Fed chair expires in May, though he could remain a board member through 2028; Trump has ruled out Treasury Secretary Scott Bessent for the position

U.S. stock markets experienced a volatile trading week driven by geopolitical tensions and central bank concerns, with all three major indexes heading toward weekly losses despite the Dow and S&P 500 hitting fresh records mid-week. Key pressures included a DOJ criminal investigation into Fed Chair Powell, Trump's call for interest rate cuts, and China blocking Nvidia H200 chip imports. The tech sector showed resilience with Alphabet crossing $4 trillion market cap, while chip stocks dominated headlines amid Taiwan Semiconductor's earnings.

• Geopolitical risks included China advising customs agents to block Nvidia's H200 chips and tensions over Greenland with Denmark, while a U.S.-Taiwan trade deal provided some support
• Chip sector activity surged following Taiwan Semiconductor's earnings report, with Nvidia remaining a favorite among investors and director purchases at Micron Technology boosting sentiment
• Major corporate developments included Walmart reaching records on an Alphabet partnership deal, Allegiant Travel acquiring Sun Country Airlines, and AST SpaceMobile securing a Missile Defense Agency contract

U.S. stocks turned choppy and largely lower mid-session Friday as President Trump created uncertainty about the Federal Reserve Chair nomination, suggesting he wants to keep Kevin Hassett in his current role rather than nominate him to the Fed. This triggered a selloff after a volatile week shaped by Trump headlines, Iran tensions, and profit-taking, though Taiwan Semiconductor's strong earnings and a U.S.-Taiwan trade deal had fueled Thursday's rally.

• Kevin Warsh surged ahead in prediction markets as the front-runner for Fed Chair after Trump's comments about keeping Hassett as National Economic Council Director
• The U.S. and Taiwan reached a trade agreement with Taiwanese chip and tech companies committing at least $250 billion in U.S. production capacity investment
• Sectors showed mixed performance with real estate leading (+0.79%) on lower mortgage rates while materials lagged (-0.79%); Honeywell (+2.39%) and American Express (+1.99%) supported the Dow while Salesforce (-1.95%) weighed on it

Federal Reserve Vice Chair for Supervision Michelle Bowman said the Fed should remain ready to cut interest rates again due to fragility in the labor market, despite inflation retreating toward the central bank's 2% target. Her remarks contrast with other Fed officials who have signaled no urgency to act, as the central bank holds rates at 3.50%-3.75% following three cuts totaling 75 basis points in late 2025.

• Bowman warned the job market is 'increasingly fragile' and could deteriorate quickly, meaning the Fed should avoid signaling a pause in rate cuts and remain ready to adjust policy toward neutral
• Fed officials currently project only one quarter-point rate cut for 2026, with most policymakers expressing no urgency as inflation remains above the 2% target
• The Fed faces pressure from President Trump to lower rates, with Trump expected to soon announce his choice to replace Fed Chair Jerome Powell whose term ends in May

President Donald Trump announced he may impose tariffs on countries that do not support U.S. acquisition of Greenland, citing national security concerns. This represents an escalation in Trump's efforts to acquire the Danish territory and marks a novel application of his tariff strategy to territorial expansion goals.

• Trump stated 'We need Greenland for national security' as justification for potential tariff measures against non-compliant countries
• The announcement signals Trump's willingness to use executive tariff powers as leverage in his increasingly aggressive campaign to acquire Greenland
• The White House did not immediately provide additional details on which specific countries could face tariffs or implementation timeline

U.S. stock markets showed mixed performance during the week, with small-cap Russell 2000 reaching new highs while the Nasdaq fell modestly and the S&P 500 and Dow Jones hit all-time records before retreating. Core CPI inflation came in lighter than expected at 2.6% for December, while earnings season kicked off with Taiwan Semiconductor reporting strong results that boosted chip stocks, and major banks delivering mixed quarterly reports.

• Taiwan Semiconductor topped estimates with Q4 EPS up 43% and sales up 28% to $33.73 billion, guiding to $35.2 billion revenue for Q1 (up 36%), lifting AMD, Nvidia, and semiconductor equipment suppliers to record highs
• Major banks showed split results: JPMorgan, Wells Fargo, Citigroup, and Bank of America fell on disappointing earnings, while Goldman Sachs, Morgan Stanley, and BlackRock beat forecasts and hit record highs
• President Trump's proposed 10% cap on credit card interest rates and support for the Credit Card Competition Act triggered sell-offs in American Express, Capital One, Visa, and Mastercard

Kevin Warsh has emerged as the frontrunner for Federal Reserve chair according to prediction markets after President Trump suggested he wants to keep Kevin Hassett in his current role as National Economic Council Director. Trump's Friday comments implied Hassett, previously seen as a top contender, would not be selected for the Fed position.

• Traders on Kalshi prediction market moved Warsh well ahead of his closest competitor Hassett following Trump's remarks
• Trump publicly thanked Hassett during White House remarks and stated 'I actually want to keep you where you are'
• Warsh is a former Federal Reserve Governor, positioning him as an experienced candidate for the central bank's top role

U.S. manufacturing output unexpectedly rose 0.2% in December 2025, driven by a surge in primary metals production, though the sector contracted in the fourth quarter overall. The manufacturing sector, representing 10.1% of the economy, has been impacted by Trump's import tariffs and shed 68,000 jobs in 2025 despite some support from AI investment and duties protecting certain industries.

• Factory production increased 0.2% in December versus expectations of a 0.2% decline, but dropped at a 0.7% annualized rate in Q4 after growing 2.8% in Q3
• Primary metals output jumped 2.4% while motor vehicle production fell 1.1%, marking the fourth consecutive monthly decline in auto manufacturing
• Manufacturing lost 68,000 jobs in 2025 as Trump's tariffs created mixed effects, benefiting industries like primary metals facing foreign competition while hurting other segments

US stocks opened higher on Friday, with the S&P 500 up 0.3%, Dow Jones up 0.2%, and Nasdaq leading with a 0.5% gain. Technology and industrial stocks drove the advance, helping Wall Street close a turbulent week on a positive note despite mixed weekly performance across major indices.

• Semiconductor stocks rallied following strong Q4 earnings from Taiwan Semiconductor and a $250 billion US-Taiwan trade agreement committing to expanded chip production capacity domestically
• Industrial leaders IBM and Honeywell rose 1.9% and 1.6% respectively, while Tesla gained over 1%, reflecting investor interest in automation and AI-driven sectors
• Morgan Stanley warned that AI adoption may proceed slower than expected and noted headwinds from elevated credit levels and affordability pressures that could limit consumer spending gains

Friday's monthly options expiration is expected to increase S&P 500 volatility from historically low levels, as the index hovers near record highs around 7,000. Ten-day volatility recently fell to 8.1%, roughly half its 52-week average of 17%, suppressed by traders selling index call options. The expiration could remove volatility-dampening forces and expose markets to greater swings amid upcoming catalysts including a Supreme Court tariff decision, the Fed meeting, and the Powell investigation.

• The week after monthly options expiration typically sees the S&P 500 move 2% (either direction) versus 1.5% average weekly moves, based on past year data
• Traders selling call options at the 7,000 level leave dealers 'net long gamma', forcing them to buy dips and sell rallies, which locks the market in a tight range
• Individual stocks like Nvidia and Tesla face heightened volatility risk as roughly 25% of their total open options contracts expire Friday

Dealmakers at the ICR Conference in Orlando predict increased M&A activity and IPOs in the retail and consumer goods sectors for 2026, following a slowdown in early 2025 caused by U.S. tariffs. Several companies including restaurant chains, convenience stores, and PE-backed firms are preparing to go public, with the pipeline of quality IPO candidates at its highest level since 2021. The optimism follows a resurgence of mega deals in late 2025, including Kimberly-Clark's acquisition of Kenvue.

• Goldman Sachs reports the number of high-quality companies queued for 2026 IPOs is the highest since 2021, potentially reopening regular exit opportunities for private equity investors
• Major deals resumed in late 2025 after Trump's 'Liberation Day' tariffs stalled activity, including Kimberly-Clark buying Kenvue, Kraft Heinz unwinding its 2015 merger, and Keurig Dr Pepper's $18 billion JDE Peet's acquisition
• Private equity firms are outbidding corporations for some deals, and activist investors taking stakes in companies like Starbucks and Lululemon could drive additional M&A activity and corporate breakups in 2026

JPMorgan Chase has created a new advisory team called 'private capital advisory & solutions' to help companies and sponsors raise capital from private markets. The move reflects Wall Street's strategic shift as high-profile firms like OpenAI and SpaceX remain private longer despite valuations exceeding S&P 500 averages. Keith Canton, former head of Americas equity capital markets, will lead the new group.

• The team will be led by Keith Canton (20+ years experience) and combines JPMorgan's private capital advisory and M&A capabilities, reporting to global heads of advisory and capital markets
• Formation reflects the growing importance of private markets as companies stay private longer even with valuations topping S&P 500 averages, prompting banks to address capital-raising needs outside public markets
• JPMorgan maintained its position as the world's top investment bank with highest fees in 2025, according to Dealogic data

Wall Street's six largest banks reported record 2025 revenues of approximately $593 billion, up 6% year-over-year, driven by rebounding dealmaking, strong trading activity, and unexpectedly robust lending growth. Combined profits reached $157 billion, up 8%, as equities trading, M&A activity, and loans to financial institutions surged despite earlier slowdown fears. The positive momentum is expected to carry into 2026, though uncertainty remains around Trump's proposed credit card interest rate cap and market volatility.

• Trading desks drove earnings strength, with equities trading revenue surging 23-33% across major banks due to market volatility and increased hedge fund leverage, particularly at Goldman Sachs which generated $16.5 billion in equities trading revenue.
• The four largest US lenders expanded loan books by $385 billion (nearly 10% growth), with the biggest surge coming from lending to specialty finance firms, private equity funds, and private credit investors (up 30%), raising concerns about hidden leverage in the financial system.
• Investment banking pipelines are robust, with M&A volumes potentially approaching 2021 records and debt underwriting surpassing 2020 peaks, fueled by anticipated IPOs from high-profile companies like OpenAI, SpaceX, and Cerebras.

US stock futures rose Friday morning, led by technology stocks, as positive sentiment from TSMC's earnings and a US-Taiwan trade deal helped ease recent tech sector concerns. Nasdaq 100 futures climbed 0.5% while the S&P 500 added 0.2%, following a Thursday rebound that ended a two-day losing streak. Despite the morning gains, major US indices remain on track to finish the week slightly lower.

• Chip stocks rallied after TSMC earnings and news of a US-Taiwan trade deal that could channel $250 billion into American chip and technology manufacturing
• Markets showed resilience despite a heavy news backdrop including Iran tensions, Greenland debate, and a criminal probe raising questions about Federal Reserve independence under President Trump
• Oil prices rose with Brent crude above $64 per barrel as fears of military strikes on Iran eased, while silver slipped but remained up over 15% for the week

Wall Street's largest banks reported strong fourth-quarter 2025 results, driven by robust investment banking activity, elevated trading revenues from market volatility, and healthy consumer lending growth. However, President Trump's proposed cap on credit card interest rates has raised industry concerns about credit availability and profitability. Executives remain optimistic about 2026 despite regulatory uncertainties and market valuation concerns.

• Interest income rose across major banks as commercial loans and credit card balances grew, though Trump's proposed credit card rate cap drew sharp pushback from executives warning it would restrict credit access
• Global investment banking revenues exceeded $100 billion in 2025 as M&A activity surged, with bankers optimistic about continued momentum as antitrust pressures ease
• Trading desks capitalized on market volatility with equity trading showing particularly strong gains driven by increased use of leverage and options products

Despite significant geopolitical tensions in early 2026 including the Trump administration's capture of Venezuela's president, threats against Iran, and discussions of forcibly annexing Greenland, global equity markets have continued to rise. The S&P 500 is up 1.5% year-to-date, while European and Asian markets have also posted gains, with some reaching record highs.

• Major U.S. indices are all positive for the year: the S&P 500 up 1.5%, Dow Jones up nearly 3%, and Nasdaq up 1.2%, showing Wall Street is largely unfazed by geopolitical headlines.
• Analysts attribute the muted market reaction to isolated events with no major power responses, absence of significant oil price shocks, and markets becoming 'conditioned' to Trump's actions since 2025.
• Asian markets have performed particularly well, with the MSCI AC Asia Pacific Index up over 5% to record highs, driven by expectations of easier monetary policy and continued AI spending rather than geopolitical concerns.

Taiwan and the United States reached a trade deal that reduces tariffs on Taiwanese semiconductor exports and commits Taiwan to $250 billion in new U.S. investments in semiconductors, energy, and AI. The agreement, led by Taiwan Vice Premier Cheng Li-chiun, aims to establish Taiwan as a strategic AI partner with the U.S. while encouraging reciprocal American investment in Taiwan.

• Taiwanese companies will invest $250 billion in U.S. technology production, including $100 billion already committed by chipmaker TSMC in 2025, with Taiwan guaranteeing an additional $250 billion in credit
• The deal cuts tariffs on many exports from Taiwan, a major semiconductor powerhouse, as the Trump administration pushes for more chip production in the U.S. to support AI development
• Taiwan's Vice Premier emphasized the investment is company-led rather than government-led, and Taiwanese firms will continue domestic investments while pursuing closer AI strategic partnership with their key security ally