U.S. stocks drifted lower in this week, as investors digested early fourth‑quarter earnings, stubbornly mixed inflation data, and a Treasury market that seems determined to remind everyone that “higher for longer” is still a thing, even if no one wants to RSVP. The S&P 500 slipped about 0.4% for the week, the Dow edged down roughly 0.3%, and the tech‑heavy Nasdaq lost about 0.7%, while the small‑cap Russell 2000 cheerfully ignored the gloom and climbed around 2%, extending a striking run of outperformance and closing at record territory. Early‑cycle vibes in small caps contrasted with a pause in the mega‑cap trade, as investors rotated around the equity style box in search of what still looks cheap in a market that increasingly does not.
On the macro front, the economic calendar was short on quantity but long on interpretation, thanks in no small part to the lingering effects of the now‑ended 43‑day federal government shutdown that has left key data releases playing catch‑up. November producer prices, delayed by the shutdown, showed a moderate 0.1% monthly gain and a 3.0% year‑over‑year increase, while December CPI, also distorted by missing October inputs, rose about 0.3% on the month and 2.7% from a year earlier, reinforcing the view that disinflation is ongoing but no longer linear. Fed officials, for their part, stayed in pre‑meeting mode: the January FOMC gathering is scheduled for January 27–28, with the Beige Book already released on January 14, and speeches from senior policymakers repeatedly emphasized that balance‑sheet normalization has already shifted into a reserve‑management phase and that no imminent policy pivot should be inferred from the Fed’s recent technical adjustments. The Treasury curve inched bear‑steeper, with the 2‑year yield pushing toward roughly 3.6% and the 10‑year around 4.2%, reflecting slightly higher rate expectations and some term‑premium rebuilding as investors reassessed the timing and depth of eventual cuts. In the background, the prior shutdown’s impact still rippled through the calendar, with economists and traders alike parsing each release less for perfection and more for direction.
Policy and politics remained firmly in the market’s line of sight. The Trump administration’s broad tariff regime continued to filter through inflation and corporate commentary, with economists noting that December’s CPI report likely captured more of the cumulative impact of elevated import duties, even as many businesses have absorbed part of the cost to maintain margins and market share. The federal government shutdown has ended, but the data backlog remains, and the episode has become another variable in the inflation narrative, as statisticians literally interpolate missing price changes from the autumn while markets attempt to extrapolate future Fed moves from imperfect information—an exercise that may be good for bond volatility if not for anyone’s blood pressure. For now, there were no fresh, market‑moving tariff escalations or new shutdown scares this week, leaving investors to focus on earnings, the January 28 FOMC decision, and the slow return of a “normal” data flow that looks anything but.
In commodities and crypto, the store‑of‑value crowd enjoyed another week in the sun—albeit one filtered through the soft glow of trading screens. Spot gold and silver hovered near record territory, extending their powerful rallies from 2025 as investors balanced disinflation with persistent geopolitical and fiscal worries; both metals approached or exceeded prior all‑time highs intraday before closing a bit off the peaks, a pattern that suggests profit‑taking rather than fading conviction. Crude oil, by contrast, gave back earlier gains, with Brent settling in the low‑to‑mid‑60‑dollar range and WTI in the high‑50s per barrel as some geopolitical risk premium bled out after signs of de‑escalation in recent U.S.–Iran tensions and amid the first Venezuelan oil sales under the new U.S. policy framework. Bitcoin, never one to underperform in the drama department, surged through the mid‑$90,000s and briefly above $97,000, riding a wave of regulatory optimism, institutional adoption chatter, and a renewed appetite for speculative risk—leaving traditional “safe havens” looking positively understated by comparison.
Among individual names, Eli Lilly spent the week as a reminder that even market darlings occasionally encounter gravity: shares traded around the low‑$1,000s and fell roughly 3–4% midweek after reports that the FDA delayed its decision on Lilly’s closely watched oral GLP‑1 obesity pill, orforglipron, and as a fresh antitrust suit targeted the GLP‑1 market’s dominant players. The news injected a dose of uncertainty into Lilly’s incretin‑fuelled growth story, even as analysts largely maintained constructive views in light of strong Q4 sales momentum for Mounjaro and Zepbound and highlighted a high‑profile, roughly $1 billion AI drug‑discovery tie‑up with NVIDIA as a longer‑term catalyst. Chip and AI‑linked bellwethers were again central to the tape: NVIDIA remained under a spotlight of bullish broker commentary and prominent “top calls” lists, while Taiwan Semiconductor’s broader foundry narrative—benefiting from sustained AI and high‑performance computing demand—kept it firmly embedded in discussions about the sector’s 2026 capex cycle. Apple, Tesla, Palantir, Broadcom, Micron, Intel, Oracle, Meta, and other large‑cap tech and AI‑adjacent names all featured heavily in options and analyst chatter, reflecting a market that may be taking a breather in price action but is still very much obsessed with figuring out which part of the AI stack will deserve the next valuation upgrade. In the broader corporate landscape, M&A expectations for 2026 remained high following a strong rebound in large deals last year, with recent commentary highlighting blockbuster tie‑ups across telecom, software, and infrastructure—such as Netflix’s pending purchase of Warner Bros. Discovery and a string of multibillion‑dollar strategic and sponsor‑backed transactions—though no new mega‑deals this week rivaled those December headlines.
The primary markets, while hardly euphoric, showed more vital signs than in recent years. One small operating company IPO and three SPACs priced in the U.S. this week, while eight additional IPOs, including several larger offerings, joined the pipeline with fresh filings, giving bankers a little more to talk about than their golf handicaps. On the ETF front, the Nasdaq calendar showed new BNY Mellon municipal fixed‑income ETFs among the latest listings, underscoring the ongoing shift of retail and advisory flows toward lower‑cost vehicles even as traditional IPOs cautiously re‑emerge. Dealmakers’ outlook pieces highlighted robust M&A pipelines across energy, telecom, and technology heading into 2026, with upcoming transactions in sectors ranging from AI infrastructure to renewable utilities, even if this particular week’s tape was dominated more by positioning than by splashy new announcements. Against that backdrop, the major equity benchmarks’ modest declines, the Russell 2000’s quiet heroism, and the unmistakable bid in gold, silver, and Bitcoin suggested a market that is not so much risk‑off as it is risk‑reallocated—a kind of sophisticated game of musical chairs where the music has slowed, but nobody seems quite ready to leave the room.
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