Anna's Markets Recap

_{Just facts, you think for yourself}

Saturday, 5:18 AM

January 10, 2026

Good morning news friend! Here is a quick recap of what happened in the markets this week. 📰🌟

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What Moved Markets Last Week

The trading week ending January 9, 2026, was defined by a sharp widening of the gap between market sentiment and granular economic reality. While headline indices like the S&P 500 and Dow Jones Industrial Average pushed to record highs, driven by a narrative of a "Goldilocks" soft landing, a forensic look at the data reveals a more fractured landscape.

The primary driver of the week’s price action was the belief that the economy is cooling enough to invite Federal Reserve accommodation without collapsing into recession. This view was ostensibly supported by Friday’s Employment Situation Report. The headline number showed the US economy added just 50,000 nonfarm payrolls, significantly missing the consensus expectation of 73,000. Superficially, this "miss" fueled the "bad news is good news" trade, solidifying expectations for a rate pause or cut.

However, the underlying details suggest structural weakness rather than a controlled cool-down. The report included negative revisions of 76,000 jobs to the prior two months, effectively erasing the perceived strength of late 2025. Furthermore, while the unemployment rate ticked down to 4.4% (from 4.6%), this was driven by a contraction in the labor force participation rate to 62.4%, rather than job creation. Perhaps most concerning for the "soft landing" thesis is that wage inflation remains sticky; average hourly earnings rose 0.3% month-over-month and 3.8% year-over-year. This 3.8% figure sits uncomfortably above the Fed's target, implying that the "last mile" of the inflation fight remains unresolved.

This economic bifurcation was further highlighted by the divergence in ISM data. The ISM Manufacturing PMI languished in contraction for the tenth consecutive month at 47.9, with 85% of the sector’s GDP contracting. Conversely, the ISM Services PMI expanded at a robust 54.4, driven by healthcare and technology. This creates a policy dilemma: a rate cut to save manufacturing risks overheating the already inflationary services sector.

The bond market remained relatively calm amidst this volatility, with the 10-year Treasury yield finishing the week stable at roughly 4.18%. This suggests fixed-income markets are pricing in a normalization scenario, looking past the immediate noise of the labor data to a period of stabilized real rates.

Finally, Gold remained near record highs at roughly $4,508/oz, heavily bought despite a $6.8 billion index rebalancing sell order that hit the market during the week. The metal’s resilience in the face of forced selling highlights immense demand for non-sovereign assets. This is driven by the geopolitical instability (Venezuela) and the "debasement trade"—the realization that with wage inflation at 3.8% and the Fed under pressure to cut rates, real returns on cash will likely remain suppressed.

Tech and Growth

The Technology sector, the engine of the bull market, is undergoing a critical transition in 2026: the shift from "AI Hype" to "AI ROI." The Consumer Electronics Show (CES) in Las Vegas served as the backdrop for this reality check, separating infrastructure winners from valuation-constrained giants.

Nvidia (NVDA) largely stalled, trading flat around $184.86 despite CEO Jensen Huang unveiling the "Rubin" computing platform and new autonomous driving models. The muted reaction highlights a "sell the news" dynamic where perfection is priced in. The market is also grappling with the "DeepSeek" shadow—the fear that more efficient, lower-cost models could eventually threaten the moat of pure compute volume. Additionally, technical factors played a role, with options flows pinning the stock near its "Max Pain" strike of $185.

In contrast, Broadcom (AVGO) rallied 3.8% on the back of its Wi-Fi 8 platform launch. This move reflects a capital rotation toward "Edge AI." Investors are betting that regardless of which LLM model prevails, the bottleneck will shift to connectivity and latency. Broadcom’s position as the "nervous system" for AI infrastructure makes it a prime beneficiary of the deployment phase.

The week also marked the resurgence of "Political Alpha," most notably with Intel (INTC), which surged 10.8% on Friday. The catalyst was not fundamental but political: a high-profile meeting between executives and the White House, followed by supportive social media commentary from the President. In an era of "America First" industrial policy, the market is pricing in a government backstop for Intel, viewing it as a strategic national asset that will be supported via subsidies or protectionism, regardless of its near-term foundry struggles.

Meta Platforms (META) also outperformed, gaining 1.1% to close at $653.49. The stock benefited from reports that an impending executive order on AI would preempt fragmented state-level regulations, effectively creating a regulatory moat for its open-source Llama models.

Banks and Financials

The Financial sector acted as the "canary in the coal mine" for the consumer economy, revealing a stark contrast between credit risk and transaction volume.

JPMorgan Chase (JPM) underperformed, closing at $326.57, weighed down by commentary from leadership describing the consumer environment as "fragile." This characterization is critical; it implies that the excess savings buffers of the post-pandemic era are fully depleted, leaving households reliant on revolving credit. The market is also wary of the upcoming Q4 earnings, anticipating higher provisions for loan losses as the bank moves to "kitchen sink" bad debt ahead of a potential slowdown.

Conversely, the payment networks Visa (V) and Mastercard (MA) found support, with Mastercard closing at $579.23. This divergence illustrates the difference between balance sheet risk and volume risk. While banks face losses from defaults, payment networks benefit from the nominal spending growth driven by 3.8% wage inflation. As long as employment holds and prices remain elevated, transaction volumes (particularly in the expanding Services sector) continue to grow. HSBC upgraded the pair during the week, noting their valuation discount relative to historical averages, positioning them as a "Growth At a Reasonable Price" (GARP) safe harbor.

Consumer Goods and Healthcare

This sector displayed the most violent divergence of the week, driven by the collision of inflation dynamics and the "Trade-Down" effect.

UnitedHealth Group (UNH) was a significant laggard, dropping 5% intraday to $343.51 after issuing an earnings warning. The core issue is the Medical Cost Ratio (MCR). The same wage inflation and labor shortages boosting the services economy are crushing insurer margins. Hospitals are demanding higher reimbursements to pay staff, and post-pandemic utilization rates remain high. Because insurers priced their 2026 premiums based on older, lower inflation assumptions, they are now caught in a margin squeeze that is structural rather than transient.

Eli Lilly (LLY) saw volatility related to the global GLP-1 weight-loss market. Reports of aggressive price cuts in China by both Lilly and Novo Nordisk raised fears of faster-than-expected commoditization in international markets. However, the stock found support from optimism surrounding its oral candidate, "Orforglipron," which promises to expand the total addressable market significantly beyond injectable therapies.

On the retail front, Costco (COST) and Walmart (WMT) rallied, with Costco up 1.05% to $924.88. These retailers are the primary beneficiaries of the "fragile" consumer mentioned by JPMorgan. Costco reported an 8.5% increase in December net sales, confirming the "Trade-Down" thesis: middle-class consumers are not stopping spending, but shifting volume from high-margin specialty stores to bulk value retailers. The manufacturing recession also benefits these giants, allowing them to pressure suppliers on cost while maintaining their own margins.

Energy and Industrials

The Energy sector provided the week’s most dramatic "Black Swan" event, completely decoupling stock performance from underlying commodity prices.

Exxon Mobil (XOM) traded resiliently around $124.43, ignoring a warning that lower oil prices would hit Q4 earnings by ~$1.2 billion. The narrative was entirely geopolitical: the capture of Venezuelan President Nicolás Maduro by US forces. The market immediately priced in a "Regime Change" scenario that could reopen Venezuela’s massive reserves to US majors. Investors treated this as a massive long-term call option on assets that had been written off, viewing the geopolitical shift as far more valuable than a singular quarter of earnings variance.

In the Industrial space, Home Depot (HD) surged 4.2% to $374.66, acting effectively as a bond proxy. The weak jobs report solidified the view that mortgage rates have peaked, and reports of a potential $200 billion government purchase of mortgage bonds added fuel to the fire. If rates stabilize or fall, the housing turnover that drives Home Depot’s renovation business is expected to accelerate.

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Baked with love,

Anna Eisenberg ❤️