Stocks opened 2026 on a bullish note, recording record highs and a shifting of investor and trading interest. Even a lackluster jobs breakdown with fewer jobs added in December could not dim continued market interest. According to the recently released University of Michigan Sentiment survey, consumer sentiment is creeping higher. Friday’s close of the Dow Jones Industrial Average and S&P 500 were at record levels, as again the Dow Jones added 238 points at close Friday. The quiet small cap value Russell 2000 Index was up 4.6% for the week, signaling that wall street’s “rotation trade” is working after high techs churned higher the past three years and artificial intelligence stocks came on strong in 2025. Investors and traders, and market gurus are slowly pivoting to “the old guard,” value stocks with long and successful track records of the Dow Jones and S&P 500 equities, as ‘lightning up’ of AI and favored high techs continues. “I think the economic outlook looks brighter for 2026, and the U.S. expansion is likely to broaden this year,” said Bill Adams, chief economist for Comerica Bank. An upcoming Supreme Court ruling on President Trump’s “sweeping tariffs,” which is also weighing on investors’ minds, is due next week.
President Trump has initiated a criminal investigation into Fed chief Jereome Powell and his handling of the building project-addition of the Federal Reserve’s headquarters. Most every past Federal Reserve Chief, prominent bankers [Jamie Dimon, CEO of JPMorgan Chase] and noted economic exports have refuted President Trump’s intentions. They all sided with Mr. Powell, his policies and the course he has followed. They have called the investigation a witch hunt, trying to remove Mr. Powell for not responding to Trump’s continuing demand to cut rates. “There is nothing good to come of challenging the independence of the world’s most important central bank,” said Richard Bernstein, chief executive officer of Richard Bernstein Advisors. He added, “The Fed potentially losing independence only makes stronger the argument for additional non–U.S. exposure.”
Markets Monday were quiet as the indexes were all conservatively positive. The 10-year Treasury yield slid to 4.186% from 4.170% on Friday. A majority of investors feel that President Trump’s ‘bullying efforts’ will not be successful in “dictating Fed policy.” Gold is hovering at an all time high of $4,604.30 a troy ounce, with silver still soaring, resting at $84.61, up 7.3% a troy ounce, (Thursday, this week silver reached $91.01 a troy ounce, showing no signs of settling).
JPMorgan Chase’s flat earnings deflated the market on Tuesday, as the bank released slightly lower earnings as well as lower investment fee income. Jamie Dimon, CEO, however, was confident that one-time charges were the culprit, and warned that “big bank competitors are all facing similar ‘geopolitical bumps’ that could affect future earnings.” The Dow Jones Industrial Average lost 398 pointsTuesday while the S&P 500 and Nasdaq Composite closed just below flatline. Wednesday’s market was again affected by more “rotation trade,” as both the S&P 500 and Dow Jones lost 0.5% and 0.1% respectively. The super-heavy high tech and AI Nasdaq Composite exchange suffered its ”worst-day in nearly a month,” as investors and the traders continued to ‘pivot.’ Michael Antonelli, market strategist at Baird said, “We don’t need the Magnificent Seven to carry the market anymore.” Thursday’s market opened positive, with the Nasdaq Composite and its smaller caps getting investor trader attention as focus away from high texts and artificial intelligence stocks continues. The Russell 2000, of smaller value stocks, has appreciated strongly this past week, participating in rotation trading.
RUMBLINGS ON THE STREET
Senator Lisa Murkowski, (R. Alaska) WSJ – Senator called the investigation into Powell “nothing more than an attempt at coercion. The stakes are too high to look the other way: If the Federal Reserve loses its independence, the stability of our markets and the broader economy will suffer,” she said on Monday
Blake Gwinn, head of U.S. rates strategy at RBC Capital Markets, WSJ – “Permanent layoffs and jobless claims remain low… and a 4.6% unemployment rate is still low by historical standards,” as said in a note on Thursday.
Keith Lerner, chief investment officer at Truist Advisory Services, WSJ – “Thursday had another big rotation day. You have portfolio managers looking for other areas, especially now if you think that the economy has a bit of an uptick.”
Blerina Uruci, chief U.S. economist at T. Rowe Price, WSJ – “we’re looking at resilient real and nominal growth in the U.S.,so the stock market will do well in that environment historically.”
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