January markets opened 2026 on a positive note, with stocks and bonds rising despite volatility driven by geopolitics and Federal Reserve policy uncertainty. Precious metals surged and then corrected sharply, while corporate earnings remained strong. The key takeaway: staying focused on long-term fundamentals is more effective than reacting to headlines.
Download the original PDF using the button below.
A Positive Start to 2026
Stocks and bonds continued their rally into the new year. Despite headline-driven swings—including the S&P 500’s worst day since October—major indices quickly rebounded to new highs.
- S&P 500: +1.4% (briefly crossed 7,000 intra-day)
- Nasdaq Composite: +0.9%
- Dow Jones Industrial Average: +1.7%
- MSCI EAFE Index: +5.2%
- MSCI Emerging Markets Index: +8.8%
Bond markets also ticked higher, with the 10-year Treasury yield reaching 4.24%, its highest level since September 2025.
Geopolitical Events Stirred Market Volatility
In early January, a U.S. operation in Venezuela captured Nicolás Maduro, briefly pushing oil into the spotlight. Though Venezuela holds the world’s largest proven reserves, its production remains under 1% of global output due to infrastructure issues.
Later, U.S. discussions about purchasing Greenland sparked diplomatic friction with NATO countries and short-term tariff disputes. While these events caused brief market dips, stocks recovered after diplomatic talks stabilized the situation.
Investor takeaway: Geopolitical shocks often cause short-term turbulence, but their long-term impact on markets is typically limited. Staying invested through volatility has historically been the better course.
Fed Uncertainty and Precious Metals
Gold and silver soared to record levels before a sharp reversal at month-end.
- Gold: Peaked near $5,600 before falling almost 10%
- Silver: Hit $120 per ounce before retreating to $85
The rally—dubbed the “debasement trade”—was fueled by fears of currency weakening, central bank purchases, and speculation about the next Federal Reserve Chair.
When Kevin Warsh was nominated to replace Jerome Powell, expectations of policy continuity led to a quick correction in metals and a rebound in the U.S. dollar.
Lesson: Precious metals can be useful diversifiers, but their volatility shows why they should complement, not replace, a balanced portfolio.
Corporate Earnings Show Strength
Despite geopolitical and policy uncertainty, corporate earnings remained resilient.
- 33% of S&P 500 companies had reported results by late January.
- 75% beat analyst expectations.
- Estimated Q4 earnings growth: 11.9%, marking the fifth consecutive quarter of double-digit growth.
AI and technology firms continued to lead, though markets reacted cautiously due to high valuations. Broader economic growth supported strength across multiple sectors.
Severe Weather’s Short-Term Impact
Winter Storm Fern disrupted travel, power, and retail activity across 21 states. While the storm caused short-term slowdowns, such weather events rarely have lasting effects on the national economy. Most delayed activity simply shifts into future months.
Key Takeaways
- Stocks and bonds extended their rally to start 2026.
- Geopolitical tensions created volatility but markets recovered quickly.
- Gold and silver surged before correcting sharply at month-end.
- Corporate earnings remained robust, supporting valuations.
- Staying diversified and focused on long-term goals remains the best strategy.
FAQs
Q1: Why did precious metals fall after hitting record highs?
The correction followed news that Kevin Warsh would be nominated as the next Fed Chair, easing uncertainty about future rate policy.
Q2: Should investors worry about geopolitical shocks?
Short-term volatility is common, but markets tend to recover as the immediate risks fade.
Q3: What does strong corporate earnings mean for investors?
Solid profits support long-term stock values, suggesting continued economic resilience.
Q4: How do weather events like Winter Storm Fern affect the economy?
Typically, they delay spending and production rather than cause lasting damage.
Q5: What’s the main takeaway for long-term investors?
Maintain a balanced portfolio and focus on fundamentals rather than reacting to news cycles.