Friday’s GDP for the fourth quarter was much lower-than-expected, but it was still positive and shows that the economy expanded at respectable clip during the final few months of 2025 even as fears about the labor market started to intensify. We expect a strong year of economic growth in 2026, driven by business investment, consumer spending and fading trade headwinds.
Friday’s delayed PCE for December was stronger-than-expected and remains stubbornly above the Fed’s 2% target. Even though this data is now a few months old, it shows that the Federal Reserve’s inflation problem is far from solved even if it remains on hold when it comes to near-term rate cuts amid the Federal Reserve Chair transition.
The stock market has been extremely resilient so far in 2026 even amid continued geopolitical concerns and worries about AI overextension.
The dips so far in 2026 have been shallow, fast and profitable for investors who have the stomach and speed to put new money to work on a moment’s notice. We expect this dynamic to remain throughout the rest of 2026. Dip buying can be profitable, but it’s easy to miss these dips thanks to their speed.
For the near-term, investors will continue to look for evidence that companies are seeing a return on the massive amounts of AI-related spending, and start to play closer attention to which companies will have the most long-term staying power from AI.
So far this year, international stocks continue to outperform U.S. stocks, and that is a theme that could continue this year. This doesn’t mean the U.S. stocks will perform poorly, it’s just that other countries are catching up after years of global underperformance compared to U.S. stocks.
Markets are on standby Friday for a potential Supreme Court ruling on tariffs. While it’s been some time since stocks were concerned about tariffs, the ruling adds a layer of complexity to the trajectory of the tariff story
