The Week in Markets - January 18, 2026

[KATE] Good morning, and welcome to The Week in Markets for Saturday, January 18th. I'm Kate Chen.

[ALEX] And I'm Alex Morgan. This is our premium weekly deep-dive where we go beyond the daily headlines to understand what really moved markets.

[KATE] And what a week it was. Let's start with the big picture: the S&P 500 gained 1.24% on the week, the Nasdaq outperformed with a 1.87% gain, and the Dow added 68 basis points.

[ALEX] Earnings season officially kicked off with the big banks. JPMorgan and Goldman Sachs both beat expectations, with trading revenues particularly strong. But the story wasn't uniformly positive.

[KATE] Right. Regional banks disappointed, with the KRE ETF down 2% on the week. Net interest income guidance was the key metric everyone watched, and several regionals signaled pressure ahead as rate cut expectations get pushed out.

[ALEX] Speaking of rate cuts, Fed speakers were out in force this week with a consistent message: patience. Governor Waller, President Williams, and President Bostic all pushed back on the idea of imminent cuts.

[KATE] Markets listened. Fed funds futures now show the first cut priced for June rather than March. The 10-year yield settled at 4.55%, up about 10 basis points on the week.

[ALEX] In sector action, tech staged a strong rebound after a rocky first week of the year. The Magnificent Seven reclaimed leadership, with NVIDIA and Microsoft leading gains on continued AI optimism.

[KATE] The AI narrative is really the story of this earnings season. Every company is being asked about their AI strategy, and those with credible answers are being rewarded.

[ALEX] Let's talk about the January Barometer. Historically, January's performance has been predictive of full-year returns. With the S&P up nearly 2% so far this month, history suggests that bodes well for 2026.

[KATE] The stats are compelling. When January is positive, the full year is positive 85% of the time with an average return of 12%. But we should note, this year's setup is unusual given the policy uncertainty.

[ALEX] Looking at sector rotation, we're seeing a clear preference for growth over value. Technology and Consumer Discretionary are leading, while Energy and Utilities lag.

[KATE] The rotation makes sense in the context of stabilizing rate expectations. Growth stocks benefit from lower discount rates, and while rates aren't falling as fast as hoped, they're also not rising.

[ALEX] One chart I want to highlight: the equal-weight S&P 500 is underperforming the cap-weight index by about 200 basis points this month. Market breadth is narrowing again.

[KATE] That's something to watch. When leadership is this concentrated, it can be a sign of fragility. If the mega-caps stumble, there's not much underneath to catch the index.

[ALEX] For next week, we have a light economic calendar but a heavy earnings calendar. Netflix reports Tuesday after the close, and Thursday brings us Texas Instruments and Intuitive Surgical.

[KATE] Plus we'll get the first read on Q4 GDP. Consensus is looking for 2.1% growth, but the Atlanta Fed's GDPNow is tracking higher at 2.4%.

[ALEX] That's your Week in Markets. We'll be back tomorrow evening with the Week Ahead. Have a great weekend, everyone.

[KATE] The signal, not the noise.