Markets at a Crossroads: Rotation Strength vs. Tech Weakness

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Markets continued to show clear rotation rather than broad index strength. While the S&P 500 and Nasdaq finished slightly lower on the week, small caps and equal-weight stocks outperformed, confirming that the “rotation trade” remains the dominant theme. The Russell 2000 gained roughly +2.4%, while the S&P Equal Weight Index rose about +0.8%, signaling continued participation beyond mega-cap tech.

Technology leadership further fractured. Large-cap software stocks saw heavy selling, with several names hitting fresh 52-week lows amid concerns that AI platforms could disrupt traditional software business models. In contrast, semiconductors and AI infrastructure names held up better, supported by a strong earnings report from Taiwan Semiconductor. Meanwhile, economic data largely reinforced the view of a resilient U.S. economy, with strong retail sales, firm housing data, low jobless claims, and a sharply higher Q4 GDP tracking estimate.

‎TLDR Stock Market Weekly Update - Jan 16, 2026

📉 Market Trends

• Rotation Still Alive: Capital continues to flow into small caps and equal-weight stocks, even as mega-cap indices consolidate.

• Tech Leadership Splits: Software stocks weaken while semis and AI infrastructure remain supported.

• Economic Resilience: Consumer spending, housing, and labor data point to continued economic strength.

💰 Economic Data, Rates & the Fed

• Inflation: CPI and core CPI came in slightly cooler than expected; PPI annual readings remain sticky.

• Growth: Retail sales beat estimates and the Atlanta Fed raised Q4 GDP tracking to 5.3%, reinforcing growth momentum.

• Rates: Treasury yields drifted higher, with the 10-year testing the 4.20–4.25% zone—an important level for risk assets.

• Fed Expectations: Market pricing for near-term rate cuts continued to decline following firm economic data.

🏛️ Cryptocurrency News

• Crypto momentum cooled after progress on the Clarity Act stalled. Coinbase’s CEO withdrew support, citing unfavorable amendments.

• Debate continues around stablecoins, bank competition, and regulatory clarity, suggesting policy uncertainty remains a headwind near term.

Sources: Charles Schwab

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📅 Coming up next week…

Economic Events:

• Wed (1/21): Housing Starts, Building Permits, Construction Spending, MBA Mortgage Applications, Pending Home Sales

• Thu (1/22): Initial Jobless Claims, Continuing Claims, Q3 GDP (3rd Estimate), PCE Prices (Fed’s preferred inflation gauge), Personal Income & Spending, EIA Crude Oil & Natural Gas Inventories

• Fri (1/23): University of Michigan Consumer Sentiment (Final)

Notable Earnings Reports:

• Tue (1/20): MMM, UAL, IBKR, NFLX, FAST

• Wed (1/21): JNJ, SCHW

• Thu (1/22): INTC, GE, PG

• Fri (1/23): SLB

Sources: Earnings Whispers, Charles Schwab

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