Market Recap - Thursday, January 22, 2026
Stocks Push Higher as Small-Caps Shine Again
US stocks climbed for a second straight day today, with the S&P 500 up 0.55%, Dow +0.63%, Nasdaq +0.91%, and Russell 2000 +0.76% — marking another all-time high for small caps. The rally was broad, but small-cap stocks once again stole the spotlight, now outperforming the S&P 500 for a record-setting 14 straight sessions, a streak not seen since 1996.
Tech stocks led the charge with Tesla and Meta among the best performers in the Magnificent 7 group. Retail trader favorites and heavily shorted stocks also popped. Winners came from a range of sectors, including software, biotech, managed care, credit cards, and quantum computing. On the flip side, pockets of weakness showed up in aerospace, homebuilders, beverages, semiconductors, utilities, and private equity. Gold and silver soared to new all-time highs, while oil prices dropped over 2% and Bitcoin slipped. Treasury yields were mixed, and the dollar fell to its lowest levels of the day.
The economic data stayed supportive: jobless claims held steady at very low levels, GDP growth for Q3 was slightly better than expected, and personal spending continued to show healthy momentum in October and November. Inflation stayed tame with core PCE rising 0.2% for a fifth straight month. Traders continue to scale back expectations for rate cuts this year — markets now price in just 42 basis points of easing in 2026.
Political headlines also helped sentiment. Trump walked back his tariff threat for February 1st and announced a preliminary “Greenland deal” framework with NATO leaders, reducing trade tension worries. Meanwhile, investors remain focused on Big Tech earnings next week, and speculation swirls about Trump’s pick for Fed Chair, with BlackRock’s Rick Rieder gaining traction.
Here’s Our Take
Markets are finding a solid footing as fears of new tariffs fade and economic data continues to show strength without triggering major inflation alarms. Small-caps are benefiting from this “risk-on” tone, backed by strong earnings momentum and renewed interest from retail traders. While valuations are starting to look stretched in some areas, the rotation into cyclicals and smaller names shows investors are betting on a hot economy and easing geopolitical tensions.
At the same time, expectations for Fed rate cuts have been dialed back significantly, reflecting confidence in the economy’s strength — but it also means less support from monetary policy if things turn south. Gold and silver’s surge suggests investors are still hedging for volatility ahead. With the Fed in its quiet period and Big Tech earnings looming, the next big catalyst could come from the likes of Apple, Microsoft, and Alphabet next week.
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