The large cap indexes, namely the Dow Jones Industrial Average, S&P 500, U.S. Total Market Index and NASDAQ Composite, continued to hug the flat line thus far this year. However, the activity has been in the Mid Cap Russell 2000, U.S. Transportation Average, International and various commodities, to include gold, silver and oil. The difficult part is to maintain correlation to the large cap groups with most of your equity exposure, all the while nibbling at some of these other areas. We don’t think large caps are dead, but rather in a consolidation phase that began around three months ago. Given the magnitude of the run-up from the start of the bull market during October 2022 and then again when President Trump pivoted on tariffs the morning of April 9, we could be in for choppy trading for quite some time. We’re fine with that as that may very well provide energy for another leg higher.
· Certainly, the story that drove the market this past week was the rhetoric leading up to the then the speech delivered by President Trump at the World Economic Forum in Davos, Switzerland. Prior to the speech President trump had proposed taking over Greenland, perhaps using the military as well as floated the potential for purchasing the autonomous territory from Denmark. He also mentioned tariffs on those European nations that would not go along with the sale. After the market sank more than two percent on Tuesday, the President stated that he would not use the military and also called off the tariffs, citing progress in negotiations. We’re getting used to the action not matching the rhetoric. Thankfully, this time as stocks rebounded and interest rates came down a bit.
· Gold continues to rally. Investors looking for a haven amidst global geopolitical uncertainty, pushed the metal up near the $5,000 mark. This was joined by other commodities as well as oil. Several issues has led to the aforementioned uncertainty, including concerns over the ballooning U.S. Sovereign Debt, falling interest rates, a hedge against a less transparent U.S. financial system and the falling dollar, which tends to be inflationary.
· Upcoming week big for earning, especially technology as Lam Research (LRCX), IBM (IBM), ASML Holdings (ASML), Microsoft (MSFT), Meta Platforms (META), Tesla (TSLA) and Apple (AAPL) are all expected to report, amongst other large cap companies.
· Vroom, Vroom. Ouch. According to Edmunds, a leading online automotive site, reported that “the share of new-car buyers committed to monthly payments of $1,000 or more reached a record high of 20.3% of all financed new-vehicle purchases in Q4, 2025, 19.1% in Q3 2025 and 18.9% in Q4 2024.” Edmunds also reported that “the average monthly payment on financed new-vehicle purchases reached a new all-time high of $772 in Q4 2025, compared to $754 in Q3 2025 and $754 in Q3 2024.”
It’s The Economy…”
· The University of Michigan reported that its Final January Reading of Consumer Sentiment rose to 56.4 (6.6% y/y) from 52.9 in December. The final January expectations component rose to 57.0 (4.4% y/y) from 54.6 in December and lastly, the final January current conditions component rose to 55.4 (9.9% y/y) from 50.4 one month prior. Of note within the survey, according to the Survey of Consumers Director, Joanne Hsu, “year-ahead inflation expectations fell back to 4.0% this month. This is the lowest reading since January 2025 but remains well above that month’s 3.3%. Long-run inflation expectations inched up from 3.2% last month to 3.3% this month. In comparison, readings ranged between 2.8% and 3.2% in 2024 and were well below 2.8% throughout 2019 and 2020.” (Source, Univ of Michigan)
· Third Quarter Gross Domestic Product (initial revision), as reported by the Commerce Department, a tally of the output of all goods and services in the United States, rose at a revised annualized rate of 4.4% (2.3% y/y), up from an initial estimate of 4.3% and above the 3.8% recorded during Q2. Final Sales to Domestic Purchasers rose at an annual rate of 2.9% (2.6% y/y), slightly below the initial estimate of 3.0% and equal to Q2. Government Spending (Government Consumption Expenditures and Gross Investment) rose at an unrevised 2.2% (1.1% y/y) during Q3, after easing 0.1% during the second quarter. Inventory Effect (line 40) subtracted a revised 0.12% from Q3-GDP, an improvement from the 0.22% negative change initially reports and less than the previous quarter’s -3.44%. The GDP Chain Price Index remained at 3.8% (SAAR) during Q3 (3.0% y/y), after rising 2.1% in Q1. The PCE Price Index rose to an unrevised annual rate of 2.8% (0.0% y/y) after climbing 2.1% during 2.1% during Q2. The PCE Price Index Excluding Food and Energy was also unrevised at 2.9% (2.9% y/y) (SAAR) during Q3 after climbing to 2.6% in Q2. (Source, U.S. Bureau of Economic Analysis)
· The Bureau of Economic Analysis reported that Personal Income rose 0.3% during November (4.3% y/y), after climbing 0.1% during October. Disposable Personal Income (personal income minus taxes) rose 0.3% (3.8% y/y), after rising 0.1% during October. Adjusted for inflation, disposable personal income rose 0.1% in November (1.0% y/y) after sliding 0.1% in October. The Wage & Salary Component rose 0.4% in November (3.8% y/y), after rising 0.3% in October. Personal Consumption Expenditures (PCE), representing approximately 70% of economic activity, rose 0.5% during November (5.4% y/y) after falling 0.5% during October. Personal Savings (Disposable Personal Income Less Outlays) fell to an annualized rate of 3.5% during November from 3.7% in October. The Fed’s favorite gauge of inflation, the PCE Chain Price Index rose 0.2% in November, (2.8% y/y) identical to October. Excluding food and energy, the Core PCE also rose by 0.2% during those same months (2.8% y/y). (Source, Bureau of Economic Analysis)
Economic Reports scheduled to be released this week, include the following – on Monday, November Orders for Durable Goods; on Tuesday January Consumer Confidence; on Thursday, the First Estimate of Q4-2025 Gross Domestic Product, November Factory Orders and Initial Claims for Unemployment Benefits; and, on Friday, Wholesale Price Inflation as Measured by the Producer Price Index (PPI).
Several potentially market moving companies are scheduled to report earnings, to include United Health (UNH), Lam Research (LRCX), IBM (IBM), ASML Holding (ASML), Microsoft (MSFT), Meta Platforms (META), Tesla (TSLA), Visa (V), MasterCard (MA), SAP (SAP, Caterpillar (CAT), Thermo Fisher Scientific (TMO), KLA (KLAC) Apple (APPLE), American Express (AXP), Chevron (CVX) and ExxonMobil (XOM).