January Recap

January 2026 brought a barrage of headlines that might have easily derailed a more fragile market. From unexpected geopolitical flashpoints and new tariff proposals to political friction in Washington—including the nomination of a new Federal Reserve Chair and sudden scrutiny of the current one—investors had plenty of “grey swans” to process. Yet, the markets largely shrugged off the noise.

Instead of retreating, U.S. equities demonstrated remarkable resilience, driven by a strong start to corporate earnings season and sustained optimism around technological infrastructure and artificial intelligence. The major indices pushed higher, proving once again that markets are forward-looking mechanisms more concerned with corporate fundamentals and liquidity than daily political theater.

Beneath the surface, we also saw a healthy broadening of the market. While mega-cap technology stocks have dominated for the past three years, January saw capital rotating into smaller companies and international markets. This expansion of market breadth is a welcome sign for diversified investors, suggesting that the current bull market is resting on a much more balanced foundation.

Let’s Get Into the Data

• Inflation Holds Steady: The December Consumer Price Index (CPI) released in January showed year-over-year inflation at 2.7%, with Core CPI (excluding volatile food and energy) at 2.6%. While goods inflation has cooled substantially, services and shelter costs remain somewhat “sticky.”
• A Stabilizing Labor Market: The U.S. economy added roughly 50,000 jobs to close out 2025—a slower pace than previous years, but enough to show ongoing economic activity. The unemployment rate showed signs of stabilizing at 4.4%, reflecting a labor market that is cooling but not cracking.
• Solid Economic Growth: Consumer spending remains the engine of the U.S. economy. Strong retail sales and robust corporate investment point to healthy fourth-quarter GDP numbers, prompting economists to project a solid 2.0% growth rate for 2026.

What Does the Data Add Up To?

For the Federal Reserve, this combination of data paints a picture of an economy that is doing just fine on its own. After delivering three consecutive interest rate cuts in late 2025, the Federal Open Market Committee (FOMC) used its January 27–28 meeting to hit the pause button. The Fed opted to hold its benchmark federal funds rate steady in the 3.50% to 3.75% range.

Fed Chair Jerome Powell noted that economic activity is expanding at a “solid pace,” making it difficult to argue that current monetary policy is overly restrictive. With inflation lingering slightly above the Fed’s 2.0% target and the labor market stabilizing, policymakers have the luxury of patience, waiting to see how the data unfolds before committing to further cuts.

Ultimately, this means we are likely settling into a “higher for longer” interest rate environment, at least for the near term. For the broader economy, this pause is actually a vote of confidence. It signals that emergency stimulus is not needed and that businesses and consumers are adapting exceptionally well to a normalized interest rate regime.

Number of the Month

7,000

During intraday trading on January 28, the S&P 500 crossed the 7,000-point threshold for the first time in history—just 14 months after crossing 6,000. While round numbers like this often capture media attention and can spark anxiety about market tops, they are just milestones on a much longer journey. At Suttle Crossland Wealth Advisors, we view these record highs as a reminder of why we emphasize long-term, fiduciary planning over short-term market timing. Staying invested and adhering to a disciplined strategy provides the peace of mind needed to capture long-term compounding, rather than sitting on the sidelines waiting for the “perfect” time to invest.

Market Performance

Equity Markets in January

• S&P 500: +1.5%
• Nasdaq Composite: +0.9%
• Russell 2000 (Small Cap): +5.4%
• International Developed (MSCI EAFE): +5.2%

Bond Markets in January

• Bloomberg U.S. Aggregate Bond Index: +0.1%
• Municipal Bonds: +0.9%
• 10-Year U.S. Treasury Yield: Rose toward the mid-4.00% range as markets digested the Fed’s rate pause.

Looking Ahead

As we move through February, investors will be keeping a close eye on Washington. The upcoming Senate confirmation hearings for Kevin Warsh, nominated to succeed Jerome Powell as Fed Chair, will be heavily scrutinized for any hints about the future direction and independence of the central bank. Additionally, ongoing budget negotiations and the risk of a potential government shutdown could inject short-term volatility into the markets and delay crucial economic data releases.

Beyond the Beltway, the back half of the Q4 earnings season will provide further clarity on corporate profit margins and forward-looking guidance for the rest of 2026. If companies continue to show resilience and consumers keep spending, the fundamental backdrop for markets should remain supportive.

The Smart Investor

With the 2025 tax season officially upon us, now is the ideal time to get organized. Rather than scrambling in April, proactive investors should be gathering their 1099s and coordinating with their CPAs and wealth advisors. It is also the perfect window to finalize any 2025 IRA or HSA contributions before the tax filing deadline, ensuring you are maximizing your tax-advantaged growth for retirement.

At Suttle Crossland Wealth Advisors, our fee-only, fiduciary approach is designed to help you navigate these exact transitions with confidence and tax efficiency. If you are wondering how the current interest rate environment impacts your retirement income strategy, or if you simply want a second set of eyes on your portfolio to ensure it aligns with your long-term goals, we are here to help. Contact our team today to schedule a review.