Markets Open 2026 on a Strong Note in the First Full Trading Week

Markets Open 2026 on a Strong Note in the First Full Trading Week

Equity markets ended the first full trading week of the year on a strong note. Global equities, as measured by the MSCI ACWI, gained 1.50% for the week, while domestic large-cap stocks, measured by the S&P 500, rose 1.58%. All major indices posted solid gains, each finishing higher by more than 1.00%. Small-cap stocks were a standout, with the Russell 2000 surging more than 4.50% for the week.

Labor Market Report

The week featured a heavy slate of economic data, with labor market reports generally surprising to the downside and reinforcing signs of a cooling employment environment. The Labor Department reported that nonfarm payrolls increased by a lighter-than-expected 50,000 jobs in December, while October and November job gains were revised lower by a combined 76,000, though the unemployment rate edged down to 4.4%. Additional data pointed to softer labor demand, as job openings fell to 7.1 million, the lowest level since September 2024, and hires declined to 5.1 million, while ADP reported private-sector job growth of 41,000 in December, below expectations despite improving from the prior month.

U.S. Manufacturing Data

Data from the Institute for Supply Management pointed to a mixed economic backdrop, as U.S. manufacturing activity remained in contraction for a 10th consecutive month in December, with the Manufacturing PMI falling to 47.9, the lowest reading of 2025, while the employment component stayed in contraction and input prices continued to rise. In contrast, services activity continued to expand, with the Services PMI reaching its highest level of the year, supported by stronger new orders, business activity, and a rebound in employment, alongside some easing in price pressures despite remaining in expansion territory.

Global Updates

On January 3, the U.S. conducted military action in Venezuela that resulted in the capture and removal of President Nicolás Maduro and his wife, following months of escalating pressure that included a mid-December “total and complete blockade” of oil tankers. Former vice president Delcy Rodriguez assumed leadership as the U.S. signaled it would oversee a transitional period. Near-term impacts on oil markets have been limited, as Venezuela’s production remains constrained by sanctions and enforcement decisions, with output below 1 million barrels per day, representing less than 1% of global supply. Over the longer term, while Venezuela holds significant oil reserves, any meaningful increase in production would require substantial capital investment, infrastructure rebuilding, and policy clarity, making changes to global supply a longer-term consideration rather than an immediate driver of oil prices.

Looking Ahead

For the week ahead, the focus will be on key labor, manufacturing, and consumer data, with releases including the Institute for Supply Management’s manufacturing index, the Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics, consumer credit data from the Federal Reserve, weekly unemployment claims and the monthly jobs and unemployment report from the Labor Department, and the preliminary reading of the University of Michigan Index of Consumer Sentiment.

As Always

I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.