Equities End the Week Mixed Amid Headline Volatility and Earnings

Equities End the Week Mixed Amid Headline Volatility and Earnings

Equity markets ended the week mixed as investors digested earnings from several large banks to kick off earnings season, alongside ongoing political and trade-related headlines. Global equities, as measured by the MSCI ACWI, gained 0.35% for the week, supported by strength in international markets, while domestic large-cap stocks, measured by the S&P 500, declined 0.36%. Small-cap and emerging market stocks were the standout performers, with both finishing the week up more than 2.00%.

Earnings

Earnings season began with fourth-quarter results from several major banks, and investor reactions were mixed across the sector. Shares of JPMorgan Chase and Citigroup moved lower after both reported weaker quarterly profits, while Morgan Stanley and Goldman Sachs saw their stocks rise as results exceeded market expectations. Later in the week, Taiwan Semiconductor Manufacturing reported a strong increase in fourth-quarter earnings, helping lift sentiment toward artificial intelligence–related stocks.

Politics

Political and trade-related developments were also in focus during the week, as Donald Trump outlined proposals that included a 10% cap on credit card interest rates and a potential 25% tariff on imports from countries conducting business with Iran. Separately, reports that the U.S. Department of Justice was reviewing congressional testimony from Jerome Powell related to renovations at the Federal Reserve’s headquarters resurfaced concerns among investors about central bank independence.

Economy

A number of key economic data points were released during the week, offering a mixed but generally constructive picture. Inflation continued to show signs of easing, with core CPI rising 0.2% month over month and 2.6% year over year in December, the slowest annual pace since early 2021 and below expectations, while headline CPI increased 0.3% for the month and 2.7% year over year. At the wholesale level, inflation moved modestly higher, as the shutdown-delayed November producer price index showed prices rising 0.2% month over month and 3.0% year over year, largely driven by higher energy costs. On the growth side, consumer spending surprised to the upside, with retail sales rising 0.6% in November, though underlying momentum moderated as control group sales slowed to 0.4%, suggesting a more measured contribution to GDP going forward.

For the week ahead, attention will be focused on the PCE inflation report, as the Federal Reserve is scheduled to hold its first policy meeting of the year the following week.

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.