Markets Ease Lower Amid Geopolitical Headlines and Improving Economic Signals

Week Ending January 23, 2026

Markets finished a shortened but eventful trading week modestly lower as investors navigated renewed geopolitical headlines and tariff related uncertainty. While early sentiment was cautious, improving economic data later in the week helped stabilize markets and supported a more constructive tone heading into earnings season.

U.S. equities saw mild declines across major indexes, while international developed markets posted gains. Canadian equities were mixed, reflecting global volatility but supported by strength in select resource and industrial sectors.

Market Overview

Weekly Market Performance (January 19, 2026 to January 23, 2026)

• S&P 500: -0.35%
• Nasdaq Composite: -0.06%
• Dow Jones Industrial Average: -0.53%
• MSCI EAFE International Developed Markets: +0.91%
• S&P TSX Composite Index Canada: -0.16%

U.S. Markets Focused on Trade Headlines and Economic Data

Markets opened the week under pressure following renewed tariff rhetoric from the White House, particularly surrounding discussions with European nations tied to Greenland. The early headlines weighed on investor sentiment and led to a sharp pullback on Tuesday.

Key highlights:

• Markets rebounded midweek after officials signaled a more diplomatic approach and walked back tariff threats
• Revised third quarter GDP data came in slightly stronger than expected
• Weekly jobless claims surprised to the downside, reinforcing the view of a resilient labour market
• By Friday, markets traded sideways as investors looked ahead to a heavy slate of fourth quarter earnings and the first Federal Reserve meeting of 2026

Overall, market activity suggested caution rather than concern, with investors continuing to differentiate between short term headlines and underlying economic trends.

Canada and the TSX

The S&P TSX Composite Index finished the week slightly lower, broadly tracking U.S. market movements. Canadian markets were influenced by global trade discussions and energy price volatility, though diversification across sectors helped limit downside pressure.

Sector Snapshot

• Financials: Faced modest pressure amid interest rate uncertainty
• Energy: Volatile as global geopolitical developments influenced oil prices
• Materials: Mixed as metals prices softened
• Industrials: Provided relative stability

Canada’s market structure continues to offer diversification benefits, particularly during periods of heightened volatility in U.S. technology focused sectors.

Small Cap Stocks in the Spotlight

Small cap stocks delivered notable relative performance during the week. Through Thursday, small caps had outperformed large caps for fourteen consecutive trading sessions, a streak not seen since the mid nineteen nineties. That run ended on Friday as markets consolidated.

Historically, small cap stocks tend to benefit when interest rates trend lower. While longer term Treasury yields have risen in recent months, investor interest in smaller companies suggests growing confidence in economic durability.

What Is Driving the Market

Several key themes continue to shape market behavior:

• Geopolitical headlines remain a source of short term volatility
• Economic data continues to show resilience, particularly in employment and growth
• Investors are increasingly focused on earnings quality and forward guidance
• Markets are positioning ahead of central bank decisions

Why This Matters

Shortened weeks with heavy headlines often create outsized market moves that do not always reflect long term fundamentals.

Key takeaways:

• Short term volatility is a normal part of investing
• Headline driven pullbacks often resolve quickly
• Diversification across regions and sectors remains important
• Staying focused on long term goals helps reduce the impact of temporary market noise

Economic Snapshot

Markets remain highly data dependent as investors look for confirmation that inflation continues to ease without undermining growth. Upcoming data and central bank commentary are expected to play a significant role in shaping near term expectations.

This Week: Key Economic Data

Monday, January 26th 

• Durable Goods November

Tuesday, January 27th

• Consumer Confidence

Wednesday, January 28th

• Federal Reserve Interest Rate Decision
• Federal Reserve Chair Powell Press Conference

Thursday, January 29th

• Weekly Jobless Claims
• Trade Deficit November
• Productivity third quarter
• Wholesale Inventories November
• Factory Orders November

Friday, January 30th

• Producer Price Index December

This Week Companies Reporting Earnings

Tuesday, January 27th

• UnitedHealth Group
• RTX Corporation
• Boeing
• NextEra Energy
• Texas Instruments
• Union Pacific
• HCA Healthcare

Wednesday, January 28th 

• Microsoft
• Meta Platforms
• Tesla
• Lam Research
• International Business Machines
• Amphenol
• GE Vernova
• AT and T
• Danaher
• ServiceNow
• Progressive
• Starbucks
• Automatic Data Processing

Thursday, January 29th 

• Apple
• Visa
• Mastercard
• Caterpillar
• Thermo Fisher Scientific
• KLA Corporation
• Stryker
• Honeywell
• Lockheed Martin
• Parker Hannifin
• Blackstone
• Altria
• Comcast

Friday, January 30th 

• Exxon Mobil
• Chevron
• American Express
• Verizon Communications

"If we would build on a sure foundation in friendship, we must love friends for their sake rather than for our own."
– Charlotte Brontë

The more of these you take, the more of these you will likely leave behind. What are they?

^{Last Week's Riddle: My three eyes blink, and I give you commands. Although I can’t see, the changing colors in me prompt you to obey me with your wheels, feet and hands. What am I?
Answer: A traffic light.}

Glasgow University which inspired Hogwarts!

Footnotes and Sources

1. WSJ.com, January 23, 2026
2. Investing.com, January 23, 2026
3. CNBC.com, January 20, 2026
4. CNBC.com, January 21, 2026
5. WSJ.com, January 22, 2026
6. CNBC.com, January 23, 2026
7. WSJ.com, January 22, 2026
8. IRS.gov, July 18, 2025
9. Cleveland Clinic, August 25, 2025

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.

The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. The Nasdaq Composite is an index of the common stocks and similar securities listed on the Nasdaq stock market and considered a broad indicator of the performance of stocks of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

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.

International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Please consult your financial professional for additional information.