Weekly Commentary (1/5/2026) - Happy New Year!

U.S. stocks declined during the holiday-shortened week; however, most finished 2025 with double digit returns for the third consecutive year.

For the week, the Standard & Poor's 500 was down -1.0%, the Dow Jones Industrial Average shed 0.7%, and the tech-heavy Nasdaq fell -1.5%. Foreign markets continued to benefit from the falling U.S. dollar with developed markets (EAFE) rising 0.6% and emerging (EM) soared 2.3%. The price of oil declined -2.6% and gold slid -4.8%.

On the economic front, the pending Home Sales Index rose 3.3% in November, driven by lower mortgage rates, according to the National Association of Realtors. The Federal Reserve released its recent policy meeting validating their 0.25% reduction in the Federal Funds rate. There were a few Fed members that felt the target range for rates should not be changed for some time. The Labor Department reported that unemployment benefit applications for the week ending December 27 was 199,000 which is a decline of 16,000 from the prior week’s revised figures.

The bond market performance was mixed with the benchmark U.S. 10-year Treasury yield rising slightly to 4.19% from 4.12% the previous week. The overall total return of the Aggregate Bond Index fell 0.2%. This week investors will prepare for the U.S. banks reporting their earnings for the last quarter of 2025 in mid-January. The earnings per share for companies in the S & P 500 for the fourth quarter are expected to grow by 8.3%, according to FactSet. Most of the economic data this week will be focused on the labor market.

We expect the financial markets to be healthy for the upcoming year albeit volatility will rear its ugly head from time to time. Our advice is to revisit cash needs, risk tolerances, and overall objectives to asset allocations and portfolio holdings.

“Hope smiles from the threshold of the year to come.” -Alfred, Lord Tennyson