Market Recap - Friday, January 16, 2026
A Quiet Finish to the Week, but Important Signals Under the Surface
Markets mostly flat to slightly lower to end the week. The Dow fell 0.17%, the S&P 500 dipped 0.06%, and the Nasdaq edged down 0.06%, while small-caps bucked the trend with the Russell 2000 up 0.12%. It was a relatively quiet session, capping off a week of modest losses for large-cap indexes but another solid win for small caps, which have now outperformed the S&P 500 for 11 straight days — their longest streak since the 1990s.
Breadth was negative, with more stocks falling than rising, and equal-weighted indexes underperformed. Still, Nvidia and AI-linked names rallied again, as did retail favorites and high-beta stocks. Gains were also seen in semiconductors, regional banks, engineering & construction, and asset managers. On the flip side, utilities, homebuilders, cruise lines, and China tech lagged. Treasury yields rose slightly, especially in the mid-range, while the dollar held steady. Gold dropped 0.6%, silver fell 4.1% (but had a strong week overall), and oil finished up 0.4% after a volatile week.
What Moved the Market
Fed Chair Watch Gets Interesting: President Trump said he’d prefer to keep Kevin Hassett in his current role, boosting odds that former Fed governor Kevin Warsh could be the next Fed Chair. Warsh is seen as more hawkish, which helped push expectations for 2026 rate cuts even lower — now down to just 43bps for the year.
Earnings Updates Mixed: Bank earnings continued with PNC beating expectations, while M&T Bank and Regions Financial gave weaker 2026 guidance. State Street posted good numbers but took a hit on higher expenses. JPMorgan’s CEO said he plans to stay on for five more years.
Economic Data: The housing market showed some cracks as the NAHB homebuilder index dropped to its lowest since September. But industrial production beat expectations, and most of this week’s macro data — including jobless claims and regional manufacturing reports — supported the narrative of ongoing economic strength.
Fed Speak Continues: Various Fed officials continued to give mixed messages. Some emphasized caution and the need for restrictive policy, while others opened the door for cuts later in the year. Meanwhile, concerns over the Fed’s independence faded somewhat despite the ongoing investigation into Chair Powell.
Other Movers:
ImmunityBio (IBRX) soared 40% on strong trial enrollment news.
Micron (MU) jumped nearly 8% after a board member bought shares.
GE Vernova (GEV) surged on speculation it could benefit from Trump’s proposed power funding plan.
Constellation Energy (CEG) dropped after reports that big tech companies may be pushed to contract directly with utilities instead of IPPs.
State Street (STT) fell 6% despite beating on earnings, with rising costs in focus.
Here’s Our Take
Markets wrapped the week in wait-and-see mode. Small caps stole the show again, a sign that investors are warming up to broader economic strength beyond Big Tech. But there’s still plenty of uncertainty — especially around the Fed. Trump’s comment today gave hawkish Fed-watchers something to chew on, as odds increased that the next chair could be less rate-cut friendly.
The Q4 earnings season is just beginning, and expectations are high — maybe too high. So far, the bar has been tough to clear, especially for the big banks. At the same time, geopolitical tensions, Fed leadership uncertainty, and tariff questions are keeping everyone on edge.
All in all, the market is holding up remarkably well, even with all these crosscurrents. But it’s clear investors are becoming more selective, and the next few weeks of earnings and Fed developments will be key to whether we break out or pull back.
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