Stock Market Update

[BRIEFING.COM] The stock market ended the first full trading week of 2026 on a high note, with the S&P 500 (+0.7%) once again capturing record highs. Broad-based gains saw the Nasdaq Composite (+0.8%) and DJIA (+0.5%) notch similar gains, with the Dow capturing a record closing high of its own. 

Stocks had a somewhat muted opening as investors digested a heavy batch of economic data. The December Employment Situation report (50,000; Briefing.com consensus 55,000) showed slightly weaker-than-expected growth in payrolls, while the unemployment rate dipped to 4.4% from 4.5% and average hourly earnings growth accelerated to 3.8% from 3.6%. The report pushed back the market's expectation of the next rate cut from April to June but painted a solid enough picture of the labor market to quell fears of a downturn in consumer spending and the economy. 

With all recent indicators pointing to a strong 2026 economy, stocks advanced in broad fashion, similar to Monday and Tuesday's sessions. Nine S&P 500 sectors captured gains, with several sector-specific developments acting as catalysts.

In the case of the top-weighted information technology sector (+1.0%), support came from a strong rebound in chipmaker names after yesterday's pullback. The PHLX Semiconductor Index finished 2.7% higher. Sandisk (SNDK 377.41, +42.87, +12.81%) was the sector's top performer after Tom's Hardware reported the company plans a sharp increase in enterprise SSD pricing in early 2026 as AI demand grows. Intel (INTC 45.55, +4.44, +10.80%) also captured a double-digit gain after President Trump touted a great meeting with CEO Lip-Bu Tan yesterday evening. 

The consumer discretionary sector (+1.1%) also had an eventful session, with homebuilder names such as Lennar (LEN 119.25, +9.70, +8.85%) and D.R. Horton (DHI 157.28, +11.38, +7.80%) leading the advance. President Trump ordered Fannie Mae (FNMA 11.01, +0.16, +1.47%) and Freddie Mac (FMCC 10.08, -0.06, -0.59%) to purchase $200 billion in mortgage bonds, reinforcing expectations for increased mortgage-market support. Additionally, the October Housing Starts report (-4.6%) showed single-unit starts up 5.4% month-over-month and at their highest level since July.

The iShares U.S. Home Construction ETF finished 6.3% higher.

Elsewhere in the sector, many retail names such as lululemon athletica (LULU 203.90, -8.27, -3.90%) traded lower today on disappointment that the US Supreme Court did not issue a decision on the legality of President Trump's IEEPA tariffs today, as many hoped it would. The next decision day for the Supreme Court at which a ruling could be announced is next Wednesday. 

Other outperformers include the materials sector (+1.8%), which was supported by a rally in precious metals prices, and the utilities sector (+1.2%), which saw its electric companies boosted after Vistra Corp. (VST 166.40, +15.80, +10.49%) and Meta Platforms (META 653.06, +7.00, +1.08%) entered a power purchase agreement. 

Only the health care sector (-0.6%) and the financials sector (-0.4%), which will see many of its major banking names report earnings next week, finished lower. 

Outside of the S&P 500, the Russell 2000 (+0.8%) and S&P Mid Cap 400 (+0.9%) slightly outperformed their larger-cap counterparts, a trend that has held over the first two weeks of trading this year.

The market is off to a strong start in 2026, with broadening strength driving the major averages to record highs. While next week's inflation data and a pickup in earnings reports will test that momentum, the broader macro backdrop continues to point to an economy supportive of further market growth.

U.S. Treasuries had a mixed finish to the week, with longer tenors showing relative strength while the 2-year note lagged after a December jobs report that was good enough to call the market's rate cut expectations into question. The 2-year note yield settled up five basis points to 3.54% (+6 basis points this week), and the 10-year note yield settled down one basis point to 4.17% (-2 basis points this week). 

• Russell 2000: +5.7% YTD
• S&P Mid Cap 400: +4.7% YTD
• DJIA: +3.0% YTD
• Nasdaq Composite: +1.9% YTD
• S&P 500: +1.8% YTD

Reviewing today's data:

• December Nonfarm Payrolls 50K (Briefing.com consensus 55K); Prior was revised to 56K from 64K, December Nonfarm Private Payrolls 37K (Briefing.com consensus 50K); Prior was revised to 50K from 69K, December Unemployment Rate 4.4% (Briefing.com consensus 4.5%); Prior was revised to 4.5% from 4.6%, December Average Hourly Earnings 0.3% (Briefing.com consensus 0.3%); Prior was revised to 0.2% from 0.1%, December Average Workweek 34.2 (Briefing.com consensus 34.3); Prior 34.3
  • Granted, the employment situation could be better, but the key takeaway is that the low unemployment rate will temper concerns that consumer spending and the economy will slow rapidly due to a weak labor market. It will also likely keep the Fed's next rate cut at bay.
• September Housing Starts 1.306 mln (Briefing.com consensus 1.320 mln); Prior was revised to 1.291 mln from 1.307 mln, September Building Permits 1.415 mln (Briefing.com consensus 1.340 mln); Prior was revised to 1.330 mln from 1.312 mln
• October Housing Starts 1.246 mln (Briefing.com consensus 1.340 mln); Prior 1.306 mln, October Building Permits 1.412 mln (Briefing.com consensus 1.355 mln); Prior 1.415 mln
  • The key takeaway from the report is that the weakness in starts was driven entirely by multi-family units. Single-unit starts were up 5.4% month-over-month and at their highest level since July.
• January Univ. of Michigan Consumer Sentiment - Prelim 54.0 (Briefing.com consensus 53.0); Prior 52.9
  • The key takeaway from the report is that consumer sentiment, while improved a bit, is still guarded due to lingering concerns about high prices and softening labor markets.