Market Recap - Week of January 5 through January 9, 2026

The S&P 500 index rose 1.6% this week to a fresh closing high in a broad climb led by the consumer discretionary sector.

The S&P 500 ended Friday's session at 6,966.28, its highest closing level ever. The market benchmark also reached an intraday record on Friday at 6,978.36.

Shares of homebuilders and other companies connected with the housing market were among the S&P 500's top weekly gainers after President Trump said he was instructing his "representatives" [i.e., Bill Pulte, the Chairman of the Board of both Fannie Mae and Freddie Mac AND the Director of the Federal Housing Finance Agency (FHFA) that oversees these government-sponsored enterprises] to buy $200 billion of mortgage-backed securities. Unsurprisingly, one result of this is that PulteGroup (one of the largest homebuilders) was among the top gainers in consumer discretionary, rising 11% last week.

Most analysts do not foresee a lasting, significant impact on mortgage rates arising from this initiative.

Economic data came in mixed, as US December nonfarm payrolls rose by 50,000, missing the 70,000 increase expected. The unemployment rate, however, decreased to 4.4% in December from a downwardly revised 4.5% the month before. A 4.5% rate had been expected.

US consumer sentiment improved in January to its highest level since September, but remained subdued compared with year-earlier levels amid inflation and labor-market concerns, according to preliminary results from the University of Michigan survey.

The consumer discretionary sector had the largest percentage increase for the week, climbing 5.8%, followed by a 4.8% rise in materials and a 2.5% advance in industrials.

The earnings season kicks off next week with reports expected from most of the large banking and financial companies.

Last Week’s Economic Reports

Nonfarm payrolls grew by 50k in December, down from 64K the previous month.
JOLTS job openings fell to 7.15 million
December 2025 US auto sales are projected to reach 1.4 million units, the slowest-quarter pace of sales since the first quarter of 2023
The December manufacturing index* hit 47.9%, the lowest reading of 2025 and the 10th consecutive month of decline. New orders, production, and employment components were all down while prices were up.
Conversely, the December services index* was 54.4%, the highest reading of the year and the 10th consecutive month of growth. The Prices component was 64.3%
* 50% is a neutral reading for these indexes, with numbers above 50% indicating growth and below 50% indicating contraction.

Up Next

Economic data will include the December consumer and producer price indexes, as well as December new and existing home sales, and a delayed report on November retail sales.

S&P 500 Sector and Stylebox Returns

How to read the stylebox: The horizontal axis represents investment style, which can be value, blend, or growth for stocks and mutual funds. The vertical axis represents market capitalization for stocks, categorized into large, medium, and small companies. The number in each box represents the percentage growth of the category that is the intersection of the column and the row. For example, large-cap value is in the top-left corner of the box, so the large-cap value category is up by 12.4% YTD (year-to-date).

Thought of the Week

Heading into 2026, absent any major market shocks, the pieces are in place for one of the strongest years for North American M&A and IPO activity we have ever seen. Favorable economic conditions, an increasingly permissive antitrust agenda in Washington and cheaper financing costs should make it easier to facilitate transactions, with companies now operating in one of the most pro-business deal-making environments in years.

If this sounds familiar, that’s because these are very similar to the reasons why markets expected a rebound in deal activity in 2025. Sure enough, and as shown in this week’s chart, annualized 2025 North American M&A deal value is on pace to be 32% higher than in 2024–and nearly equivalent to the record total set in 2021. Now, in 2026, with tariff uncertainty fading and rates 75 basis points lower than they were at the start of 2025, confidence among business leaders is growing. According to an annual Citizens' Bank survey, sentiment for a robust deal environment is at a six-year high,with nearly 60% of companies characterizing the current M&A environment as “somewhat or extremely strong.” For IPO markets, in addition to the same tailwinds expected to boost M&A, continued strength in equity markets, a sizable backlog of older-vintage private-equity-owned companies in the pipeline, and several large, high-profile private companies expected to go public are spurring optimism this year.

With these favorable conditions in place, companies are poised to continue taking advantage of a sustained window for deal activity. Strong M&A and IPO activity is positive for investments in private equity and venture capital, which can serve as a diversified source of growth within portfolios.

Source: JP Morgan (edited)

Thank you to all who attended this month's market Update webinar!

You can watch the replay here:

https://www.youtube.com/watch?v=816v5DohZiE

The episode is also available wherever you listen to podcasts!