Weekly Market Update for January 16, 2026

by Gavyn Jensen-Schneider, Research Associate

Market indices changed little after a volatile week of trading. The S&P 500 finished the week down -0.38%, while the Nasdaq fell -0.66%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.23%, up +6 basis points (bps) from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, rose +3 bps to 3.62%.

The Department of Justice (DOJ) served grand jury subpoenas to Fed Chair Jerome Powell regarding his testimony before Congress last June, which focused on the renovation of Federal Reserve office buildings. In response, the Fed Chair released a statement in which he described the investigation as an “unprecedented action [that] should be seen in the broader context of the administration’s threats and ongoing pressure.” Over the past year, the President has speculated about removing both Chair Powell and Governor Lisa Cook.

The independence of the Federal Reserve is a vital component of monetary policymaking. The last time the Federal Reserve acquiesced to political pressures was in 1971, when President Nixon pushed then-Fed Chair Arthur Burns to ease monetary policy before the 1972 presidential election. The excessive monetary expansion helped create the “stagflationary” economy of the 1970s.

The December Consumer Price Index (CPI) released on Tuesday came in better than expected. Headline CPI was 2.7% while Core CPI, which removes volatile food and energy prices, was 2.6%. Analysts had been expecting to see Core CPI increase to 2.7%, or 10 bps higher than November. The positive print is a welcome one, as many analysts, including myself, believed the November inflation rate to be underreported due to issues in collecting and weighting the data.

Tuesday marked the unofficial start of Q4 earnings season as the Big Banks kicked off quarterly reporting. The US banks saw earnings beats on strong loan and deposit growth, controlled expenses, and good credit trends. Fee income (from investment banking and capital markets) was a mixed bag, however, with some reporting softness amidst geopolitical uncertainty despite strong pipelines for future business. Given that expectations for the banks were high, the group saw some stock pullbacks during the week. Looking forward, executives shared positive outlooks for robust growth in 2026, including a pickup in IPO activity as well as AI-driven cost savings.

Earnings season continues next week, with notable names including Netflix, Intel, and Charles Schwab. On the data side, the November Personal Consumption Expenditures (PCE) inflation index will be released Thursday morning, followed by the University of Michigan Consumer Sentiment for January on Friday. Finally, the Supreme Court will hear oral arguments next Wednesday on whether the President has the authority to fire Fed Governor Lisa Cook over her alleged mortgage fraud. While a formal ruling is not expected until later this summer, market volatility will likely hinge on the perceived leanings of the justices during the proceedings.