Stocks trended lower last week amid signs of year-end profit-taking and some sour investor sentiment over the Fed meeting minutes. The S&P 500 index shed 1% this week as the market benchmark transitioned to 2026 following its third consecutive year of double-digit percentage gains. The S&P 500 ended at 6,858.47 on Friday, up 0.2% in its first trading session of the new year but down from last week's close. The index locked in a 16% gain for 2025 on Wednesday. Trading was closed on Thursday for New Year's Day. The index edged down 0.05% in December but still added 2.3% in Q4, marking its third consecutive quarter of gains. The Nasdaq Composite Index lost 1.52%. The Dow Jones Industrial Average slid 0.67%. The MSCI EAFE Index, which tracks developed overseas stock markets, ticked up 0.31%.1,2 Sector HighlightsThe consumer discretionary sector had the largest percentage loss this week, falling 3.2%, followed by a 1.5% drop in technology and a 1.3% decline in financials. Consumer staples, communication services, real estate, health care, and materials also edged lower. Tesla (TSLA) was among the week's hardest-hit stocks in consumer discretionary, falling 7.8%. The electric vehicle manufacturer's fourth-quarter vehicle deliveries fell more than expected. In a note to clients, Wedbush Securities attributed the performance to a challenging demand environment following the end of an electric vehicle tax credit in the US and headwinds in Europe. In the technology sector, AppLovin (APP) had the largest weekly percentage drop, sliding 13%, followed by an 11% loss in shares of Palantir Technologies (PLTR). The gain in energy stocks came as crude oil futures also rose on the week. Occidental Petroleum (OXY) was among the best performers, up 6.4%. Berkshire Hathaway (BRK.A, BRK.B) said it completed its acquisition of OxyChem from Occidental for $9.7 billion. This week's US economic data will include December automotive sales as well as the Institute for Supply Management's December manufacturing index on Monday. The Institute for Supply Management will also release its December services index on Wednesday. Finally, the government's closely followed December employment report will be released on Friday. However, three sectors posted weekly gains: Energy climbed 3.3%, followed by a 0.9% increase in utilities and a 0.5% rise in industrials. 2026 Forecasts: A Grain of SaltWhen you see the word “forecast,” it should be closely followed by, “Forecasts are based on assumptions and are subject to revisions over time. Financial, economic, political, and regulatory issues may cause the actual results to differ from the forecast.” That was so true in 2025. After April 2, 2025, when Liberation Day tariffs were rolled out, many market gurus lowered their full-year forecast for the S&P 500—only to update their outlook again a few months later as stock prices roared higher. So a lesson learned—forecasts can be moving targets on Wall Street. The table shows what the Street’s best and brightest are looking for in 2026. If you toss out the highest and lowest, you can see that the others settle into a pretty tight range for the year.
What the table doesn’t show is that there will be highs and lows during the year. There will be times when stock prices look invincible. And there will be times when you wonder why you invest in stocks at all. So here’s to a Happy New Year! | ||
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Source: YCharts.com, January 3, 2026. Weekly performance is measured from Friday, December 26, to Friday, January 2. TR = total return for the index, which includes any dividends as well as any other cash distributions during the period. Treasury note yield is expressed in basis points. | ||
Focus on the FedThere was little economic data last week, leaving investors to focus mostly on the minutes from the Fed’s December meeting. The minutes, released Tuesday, revealed a divided Federal Open Market Committee regarding short-term interest rates. The news unsettled investors a bit, which led to some selling pressure.7 A divided Fed has been a persistent theme during the second half of 2025, and investors will closely watch in 2026 to see whether the Fed’s outlook may change with the appointment of a new Fed Chair. This Week: Key Economic DataMonday: Institute of Supply Management (ISM) Manufacturing Index. Auto Sales. Tuesday: Richmond Fed President Tom Barkin speaks. Purchasing Managers Index (PMI)—Services. Wednesday: ADP Employment Report. Job Openings* (Nov). Factory Orders* (Oct). Institute of Supply Management (ISM) Services Index. Fed Vice Chair for Supervision Michelle Bowman speaks. Thursday: Weekly Jobless Claims. Trade Deficit* (Oct). Productivity* (Q3). Consumer Credit (Nov). Friday: Employment Report. Housing Starts* (Oct). Consumer Sentiment. * indicates publication of a report delayed by the government shutdown in October and November Source: Investors Business Daily - Econoday economic calendar; January 2, 2026. The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to provide accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts are also subject to revision. This Week: Companies Reporting EarningsNo major companies are reporting earnings this week. Source: Zacks, January 2, 2026. Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule their earnings reports without notice. | ||
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"We may encounter many defeats but we must not be defeated." – Maya Angelou | ||
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Recordkeeping Tips for Small Business OwnersAs a small business owner, your recordkeeping is of utmost importance. These records show your income, expenses, business transactions, and much more. You can choose any record-keeping system you prefer if you and the IRS have the necessary information. As a business owner, you will need to keep track of supporting documents such as:
Keeping your records well-organized will save you time, effort, and money. This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional. Tip adapted from IRS.gov8 | ||
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Take Time for TeaAre you seeking a warm and cozy escape? Look no further than a cup of tea. Chamomile tea even has some potential health benefits! Here are just a few:
Make time for tea! Tip adapted from Medical News Today9 | ||
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What starts with P and ends with E and has thousands of letters in it? Last Week's Riddle: When I lose my jacket, I become larger and louder – but I also weigh a little less. What am I? Answer: Popcorn. | ||
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Tiger's Nest Monastery (Taktsang Palphug Monastery) Paro, Bhutan | ||
Footnotes And Sources1 .WSJ.com, January 2, 2026 10. TheStreet.com, “Bank of America unveils surprise 2026 stock-market forecast,” December 4, 2025. 11. MT Newswires, YCharts.com, December 29 - January 5, 2026 |
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
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U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
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