U.S. and Canadian Markets
Stocks climbed in January as the tailwinds of solid economic data offset the headwinds of geopolitical tensions that rattled investors during the month.
The Standard & Poor’s 500 Index advanced 1.37 percent, while the Nasdaq Composite rose 0.95 percent. The Dow Jones Industrial Average gained 1.73 percent. The Toronto Stock Exchange picked up 0.66 percent.¹ ²
“Innovation distinguishes between a leader and a follower.” - Steve Jobs, Inventor and Entrepreneur
A Choppy Rise
Stocks rose early in the month as 2026 kicked off, with the AI trade—led by chip manufacturers—setting the pace.
Investors liked what they heard about inflation, which was followed by a solid retail sales report. However, geopolitical tensions and mixed results from money center banks put some pressure on stock prices.⁵
Investors were also encouraged when the White House said it was pursuing diplomatic approaches to resolve the international debate over Greenland while walking back talk about new tariffs.⁶
Stocks largely went sideways during the last week of trading as investors flocked to megacap tech names ahead of fourth-quarter reports, which pushed the S&P 500 above the 7,000 level for the first time.⁷
Market reaction was muted to the Federal Reserve’s widely expected decision to hold interest rates steady and news that the White House nominated former Fed insider Kevin Warsh as the next Chair of the Federal Reserve.⁸ ⁹
U.S. Sectors
Eight of the 11 S&P 500 Index sectors finished the month in the green as market leadership continued to broaden beyond tech names. Energy (+14.18 percent) was the clear double-digit leader, while Materials (+8.64 percent), Consumer Staples (+7.51 percent), and Industrials (+6.65 percent) also logged solid performances. Real Estate (+2.68 percent) and Communication Services (+2.00 percent) posted more modest gains but still outperformed the S&P 500 overall. Utilities (+1.31 percent) and Consumer Discretionary (+1.47 percent) managed small gains.¹⁰
Three sectors were under pressure, including Health Care (-0.04 percent), Information Technology (-0.06 percent), and Financials (-2.43 percent).¹⁰
Canada Recap
Canada’s S&P/TSX Composite Index carried over its 2025 momentum into the new year, setting multiple record highs early in the month. Mining and materials groups were among the best performers, while financial names also contributed to the rally.¹¹ ¹²
Markets lost some momentum after the White House proposed raising tariffs following the release of the Canada-China Economic and Trade Cooperation Roadmap by Canadian officials. However, markets improved after officials clarified their position and said they were actively negotiating with the U.S.¹³ ¹⁴
What Investors May Be Talking About in February
In the month ahead, investors will continue to try separating the market’s signal from the noise created by daily headlines.
They will be watching whether interest in the stock prices broadens out beyond tech names, including AI.¹⁵
As AI begins to make its way into non-tech industries, more companies across more sectors of the economy are participating in the AI revolution.
A total of 306 S&P 500 companies mentioned AI on their third-quarter conference calls. Wall Street will be listening to companies' fourth-quarter conference calls with investors to learn if that number is expected to trend higher or lower in 2026.¹⁶
World Markets
The MSCI EAFE Index opened the year strong, picking up 5.19 percent.¹⁷ ¹⁸
In Europe, the United Kingdom (+2.94 percent) and Spain (+3.31 percent) led the way among the majors. Italy (+1.30 percent) and Germany (+0.20 percent) posted more moderate gains while France slipped 0.28 percent.¹⁸
Egypt (+14.24 percent) and Brazil (+13.70 percent) posted solid gains, while Mexico (+5.12 percent) also had a strong month.¹⁸
China’s Hang Seng Index rose 6.85 percent while Korea’s KOSPI rose 23.97 percent, extending its 2025 gains into the New Year. Meanwhile, Japan’s Nikkei rose 5.80 percent.¹⁸
Indicators
Gross Domestic Product (GDP)
The U.S. economy grew at a revised 4.4 percent annualized pace in the third quarter of 2025, ahead of economists’ expectations that GDP would remain unchanged from the Commerce Department’s 4.3 percent initial estimate. It was the fastest GDP growth in two years.¹⁹
The Canadian economy grew at a 2.6 percent annualized clip in Q3, faster than the 0.5 percent growth economists expected.²⁰
Employment
U.S. employers added 50,000 jobs in December, short of economists’ expectations. The unemployment rate ticked down to 4.4 percent in December, 0.1 percentage points lower than November’s pace and its first decline since June.²¹
Canadian employers added a net 8,200 jobs in December, stronger than expected. The unemployment rate in Canada rose to 6.8 percent.²²
Retail Sales
Consumer spending rose 0.6 percent in November over the prior month, according to the latest available federal data. November’s gain was slightly ahead of market expectations and marked a pickup from October’s downwardly revised 0.1 percent month-over-month decline.²³
While federal data for December retail sales was still unavailable as of late January, the Chicago Fed’s Advance Retail Trade Summary estimated that retail and food services sales (excluding autos and auto parts) rose 0.6 percent in December over the prior month…²⁴
Industrial Production
Industrial output rose 0.4 percent in December, beating expectations for a 0.1 percent uptick…²⁵
Housing
Housing starts fell 4.6 percent in October (the latest available federal data) over the prior month. New home sales declined slightly by 0.1 percent in October…²⁶ ²⁷
Homebuilder confidence… slipped 2 points in January… to a score of 37.²⁸
Sales of existing homes rose 5.1 percent in December… The median existing home sales price in December was $405,400…²⁹
Consumer Price Index (CPI)
Consumer prices in the U.S. rose 2.7 percent in December from a year earlier… Core inflation… rose 2.6 percent year over year…³⁰
Consumer prices in Canada rose 2.4 percent in December year over year…³¹
Durable Goods Orders
Orders… increased 5.3 percent in November… powered by a 98 percent increase in civilian aircraft orders.³²
Private-sector data suggests a contraction in manufacturing order flow in December…³³
The Federal Reserve
As expected, the FOMC kept interest rates steady in January.³⁴
FOMC members voted 10-2 to keep the Federal Funds Rate steady at its current 3.5 percent to 3.75 percent target range…³⁴
The Federal Reserve’s next meeting is March 17-18, when the Fed will publish a Summary of Economic Projections.³⁴
By the Numbers: Valentine’s Day
The amount spent on Valentine's Day in the United States in 2025 — $27.5 Billion USD³⁵
Total Valentine's Day spending in the United Kingdom in 2025 — £1 Billion GBP³⁶
Average per-person spend in Canada for Valentine's Day in 2024 — $97.80 CAD³⁷
Average spent per person in France, with 36% of the French celebrating — €154 EUR³⁸
The average amount each person in the U.S. spent on Valentine's Day gifts and experiences in 2025 — $188.81 USD³⁹
The amount spent specifically on significant others in the United States — $14.6 Billion USD⁴⁰
The share of U.S. consumers expected to celebrate Valentine's Day 2026 —56%⁴¹
Total spending on jewelry alone in the United States — $6.5 Billion USD⁴²
The percentage of Canadians who spent money on their significant others for Valentine's Day 2024 — 65%⁴³
The percentage of consumers globally who celebrate Valentine's Day — 59%⁴⁴
The percentage of Britons who celebrated Valentine's Day in 2025 — 61%⁴⁵
