Weekly Recap:

by Michael Reinking, CFA & Eric Criscuolo

Published on 1/30/26

Last week’s big events revolved around earnings, Greenland, Davos, and the global backup in yields triggered in Japan. Equities finished the week slightly lower with the S&P 500 equal-weight index modestly outperforming the main, market cap weighted index. This was a general continuation of the broad rotation in equity leadership we’ve seen so far this year. While Tech and mega caps were the clear market leaders last year, other sectors (Energy, Materials, Industrials) and cap sizes (small) have pushed Tech from that position to start the year. It was notable though that last Friday the Russell 2000 small cap index had its 15 day streak of outperforming the S&P 500 come to an end. That was the longest winning streak since 1996.

Like me trying to land a 180 and awkwardly being unable to stop, hence turning it into a 360, the start of this week saw the rotation come back on itself. We ended Wednesday with Mega Cap Growth stocks as the best performing group for the week up till then. The S&P 500 was outperforming the equal-weight index and small caps lagged.

Macro focus moved from ice-covered Greenland to ice-covered Washington D.C. The big event, marquee-wise, was the Fed rate decision and Chair Powell’s press conference. You can read our recap here.  Long story short, it was bupkis, a nothing-burger, not much sizzle or steak, but to be honest there wasn’t much expected. The Fed kept rates unchanged. Chair Powell did his own rendition of We Don’ Talk About Bruno when asked about anything that wasn’t monetary policy. The Fed statement leaned hawkish, upgrading language around the labor market and the economy.  The S&P 500 hardly moved in the last two hours of trading. The real disappointment though, was that President Trump didn’t break through the doors to Stone Cold Steve Austin’s theme music and announce his pick for new Chairman right as Powell took the mic.

We had to wait until Friday for that to occur, well not the Stone Cold thing, but on the final trading day of January, there was white smoke coming from Constitution Avenue. As was widely anticipated Trump announced Kevin Warsh as his nominee. He was in pole position on prediction markets for the last couple of weeks before Rick Rieder jumped to the top of the contenders for a couple of days. The process to get him confirmed could be tricky as some key Republicans like Senator Thom Tillis, who sits on the Senate Banking Committee has publicly vowed to block any nominees until the DOJ investigation is resolved. Warsh has called for the Federal Reserve to more aggressively cut rates but is known as an inflation hawk, a critic of QE and has called for a “regime change” including the central bank to work closer with Treasury.

With the Fed meeting a hill of beans, the market moved its gaze back to earnings, especially with the mega caps reporting. Results were generally solid and above estimates across the brigade of companies reporting, ostensibly providing a base of support. However, with the stretched valuations and high expectations, the bar was maybe a bit too high. Liz Ann Sonders (Schwab) posted that S&P companies that beat consensus were not getting rewarded at all, trading lower in reaction.

According to FactSet’s John Butters, approximately a third of S&P 500 companies have reported. 75% have beat EPS estimates, a little below the 5/10 year averages of 78%/ 76%. However, companies are beating by 9.1%, above 5/10y averages of 7-8%. On the topline, 65% have beat estimates, also below the 5/10y averages (70%/66%). His data showed EPS beats gaining 0.6% from 2 days before to 2 days after, below the 5y average of 0.9%, while misses are trading down 2.5%, slightly smaller than the -2.8% 5y average. FactSet data was likely a bit more updated and calculated over a longer period, but still shows beats not seeing the upside of prior years.

Going through some of the reports, Meta was a big winner, with shares up 10% after a big print and importantly going into detail on how AI is driving revenue growth. That addressed, for them anyway, one of the two major concerns around AI- ROIC. The other, the financial circularity of the ecosystem, remains outstanding. The company will also increase capex by about 70% next year to around $125 Billion, or about 40 times the GDP of Greenland. That was another endorsement of the durability of demand for the AI enablers. IBM was up 5% on AI-related strength too. On the other hand, Microsoft was hit hard, down 10% despite what on the surface was strong revenue and EPS numbers. The weakness was chalked up to several items: above-the-clouds expectations, concern that a huge chunk of future revenue is still tied to OpenAI, and potential caps on Azure (cloud) growth due supply constraints. Outside of tech, Caterpillar and Mastercard traded well after their earnings and Royal Caribbean ripped higher on theirs, helping to drive Travel and Leisure names higher.

With the Fed and earnings out of the way, the other big market story was the insane moves across commodities, in particular metals, which we discuss below. With the big drawdown on Friday, next week’s initial action will be must-watch. It will be interesting to see if the recent flows into that area get redeployed into other assets, like crypto.

So where does that leave us? The S&P 500 actually ended modestly higher for the week. First half gains, with the index briefly scaling 7000, were largely cancelled out by a second half pullback. The index spent Thursday and Friday testing the 20 and 50 day moving averages for support and we ended Friday sitting on 20 day.

The equal-weight trailed, lower by about 1%. However it was mega cap value and not growth that pushed the outperformance- telecom, energy, among the better groups this week. Small and mid-caps fell 1-2%.

Looking at sector performance, Meta’s 9% drove Comm Services gain, but telecom names up even more. Energy names followed oil higher- more E&P than refiners. Utilities was also a top performer. Healthcare lagged with managed care a big anchor on disappointing Medicare Advantage payment proposals. Tools were also a detractor. Tesla pushed Consumer Discretionary lower. Some significant losses in gaming and food names as well as apparel also weighed on the sector. Materials saw declines in chemicals names and precious metals miners got hit late in the week. Software has been under pressure since the summer as the cry of AI as an existential risk grew louder and louder, like Islander fans heckling John Tavares whenever he comes back to UBS arena. The group had started to show a little sign of life last week, or at least stability, but that evaporated this week with significant selling across names, not just in Microsoft.    

Higher-risk, retail/thematic groups got hit hard this week. Quantum computing saw heavy losses- most names down 15-20%. Space names outside of major aerospace were saw losses of 5-10%. Nuclear was most lower with a range of performance, from flat-ish to down over 20%. Lithium miners sold off hard, down 10-20%. Neoclouds got hit for single digit to 15%-plus losses- CoreWeave was around flat though.

As the NYSE Closing Bell rings, we’re putting a bow on the first month of 2026. The S&P was up 1%, the equal-weight up 3% and small caps up 5% with the aforementioned rotation at the start of the year. The Value factor across market caps significantly outperformed Growth. Looking at the sectors is the tell: Energy (nat gas and oil both surging), Staples, Materials and Industrials are the leading sectors so for this year.

We can briefly review the “January barometer”, or the theory that January returns predict full-year returns. The S&P’s full-year year performance has matched the direction of January returns ~80% of the time. However, we should note that the S&P is usually up on the year anyway- about 70% of the time. Still, nice to see.

Commodities & Crypto - if you’re in search of volatility look no further. The move to hard assets has been a persistent theme for awhile and that crowded positioning seemed to hit a tipping point.

This week was much more about earnings, the big macro trades and central banks as opposed to economic data. The After the open the Conference Board’s Consumer Confidence came in well below estimates fall to 84.5 from an upwardly revised 94.2.

Ahead of next week’s BLS Employment report this week’s data didn’t point to much of a change in the labor market backdrop though there were multiple companies announcing layoffs this week. The weekly ADP jobs report ticked down to 7.75k from 8k last week (next week the monthly report is released on Wednesday). Initial claims were 209k about inline with last week’s upwardly revised 210k. This was a bit higher than consensus but remains at a low level overall. Continuing claims moved down to 1.827ml from an upwardly revised 1.865ml last week. Speaking of the BLS as we’re wrapping up this week’s note the WSJ is reporting that President Trump will nominate Brett Matsumoto to head up the agency. He spent 15yrs at the BLS before working on the White House Council of Economic Advisers. 

The last impactful piece of economic data this week was PPI which came in well ahead of estimates up 0.5% m/m and 3% y/y ahead of estimates of 0.2%/3%, respectively. Air fares and portfolio management were big drivers up >2%. As we have discussed in the past and Fed Miran noted today portfolio management is very much correlated to market performance and was up 16.7% in 2025.  

There was some steepening of the curve this week though rate expectations for this year has not shifted dramatically. The USD index retested last year's lows ~$96 earlier in the week as President Trump sounded unphased by the recent weakness but bounced back after the Warsh nomination.

The Winter Olympics starting next Friday will be the appetizer to Super Bowl Sunday. Earnings will continue onward. In terms of economic data ISM surveys and the labor market data will be the most impactful data. The Warsh conversation will continue and there will be BoE and ECB rate decisions. The Treasury will also have it Quarterly Refunding announcement. The White House Crypto meeting on Monday will also get some attention. Have a great weekend!

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