Markets started the year navigating a range of headlines — from earnings and geopolitics to renewed tariff concerns. Despite that noise, the S&P 500 gained about 2% in January. More importantly, we saw clear signs of market broadening, with small caps and value outperforming.
:20
At the macro level, the backdrop remains constructive. Economic growth momentum has continued, inflation is trending lower, and tariff pass-through has remained limited, giving the Fed room to stay patient even as interest rate cuts are now expected later rather than earlier.
:36
Earnings season is reinforcing this message. The rates at which earnings and sales are beating expectations are running above historical averages. And while mega-cap tech continues to lead growth, all sectors are expected to deliver positive earnings growth — with value winning on acceleration.
:57
Looking ahead, we believe the cost of staying on the sidelines is rising. We remain constructive on stocks, prefer higher-yielding bonds over cash for income, and see a role for diversifiers like gold and flexible strategies to help improve portfolio outcomes.
1:14
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S&P 500 Q4’25 earnings growth is tracking +14% YoY vs +8% expected. Semis lead at +54% YoY while breadth is improving: 10 of 11 sectors show faster growth than last year.5
Tariff outlook: effective rate expected below 16%; a 15% Section 122 levy on most imports sunsets in 150 days. Not a macro hit for markets, but adds headline risk and volatility.
Unclear scope or duration, but a prolonged conflict could keep energy prices and inflation elevated, potentially reducing the odds of rate cuts this year and increasing market volatility.
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1. U.S. Bureau of Economic Analysis, Personal Consumption Expenditures Price Index Excluding Food and Energy. Data for December 2025 (released 2/20/26).
2. U.S. Bureau of Economic Analysis, Gross Domestic Product. Data for Q4 2025 (released 2/20/26).
3. U.S. Bureau of Labor Statistics, Civilian unemployment rate, seasonally adjusted. Data for January 2026 (released 2/11/26).
4. LSEG Refinitiv, data for Q4 2025 as of 2/25/26.
5. Source: Earnings from LSEG Refinitiv, as of February 26, 2026.
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