State of Market: Close 01/12/26
Stocks grind higher into the close as metals surge; banks lag ahead of earnings and CPI watch
S&P 500, Nasdaq-100, Dow and small-caps finish modestly up; gold and silver extend momentum amid Fed-politics headlines and geopolitical tensions; long bonds slip as investors reassess the path of rate cuts
TendieTensor.com State of Market Close
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Equities closed modestly higher on Monday, while commodities broadly advanced and longer-duration Treasurys eased. The session was characterized by a cautiously constructive tone in stocks—particularly small-caps—contrasted with strong safe-haven and real-asset demand seen in gold, silver, crude oil, and a broad commodities basket. Financials underperformed into the start of bank earnings later this week, and rate markets were slightly softer with long bond ETFs down on the day. The backdrop remained dominated by political developments around the Federal Reserve and upcoming inflation data.
Overview and index performance
- S&P 500 proxy SPY ended at 695.16 versus Friday’s 694.07, up roughly 0.16%. Gains were steady but measured, as investors balanced macro risk with an ongoing equity uptrend.
- Nasdaq-100 proxy QQQ finished at 627.19 versus 626.65 Friday, up about 0.09%. Mega-cap tech sentiment was steady, with the group consolidating after a strong start to the year.
- Dow Industrials proxy DIA closed at 495.88 versus 495.02, up approximately 0.17%.
- Small-caps (IWM) led on the day, closing at 261.49 from 260.23, up around 0.48%, consistent with a broadening of risk appetite beyond the largest names.
Macro backdrop: yields, inflation, and expectations
Treasury yield data most recently available (as of January 8) show the 2-year at 3.49%, 5-year at 3.74%, 10-year at 4.19%, and 30-year at 4.85%. That curve configuration suggests policy-sensitive front-end rates remain well below long-dated yields, but not in a deep inversion, and emphasizes the market’s ongoing calibration of growth, inflation, and policy trajectories.
On inflation, the latest available CPI data (November) show the headline index level at 325.031 and core at 331.068. While those are index readings rather than month-on-month rates, the related news flow today emphasized the risk that inflation remains sticky near-term. One preview piece noted that this week’s CPI “likely” reflects persistent price pressure that could delay the next Fed rate cut (“Inflation hasn’t gone away. CPI likely to show sticky prices and delay next Fed interest-rate cut.”). That sentiment aligns with long-end yields hovering near 4.2%–4.9% and with the modest weakness seen in long-duration Treasurys.
Inflation expectations are mixed but broadly anchored in the longer run. A model-based 1-year expectation stands at about 3.20%, while market-implied 5-year and 10-year breakevens are approximately 2.28% and 2.24%, respectively, and the 5y5y forward sits near 2.21%. Model-based 30-year expectations are around 2.44%. Taken together, investors seem to be pricing a period of near-term stickiness, but with longer-term expectations still close to the Fed’s target range. That helps explain why equities can grind higher even as gold rallies—the market is not pricing a loss of inflation control over the long run, but it is demanding hedges against near-term uncertainty.
Fed-politics and policy uncertainty
Multiple reports highlighted the Department of Justice’s criminal probe of Chair Jerome Powell related to Fed building renovations and the broader debate about Fed independence. Past Fed chairs and senior officials publicly backed Powell’s independence, and a Republican senator indicated he would block potential new Fed nominees until the probe is resolved. Markets reacted by favoring hedges—gold and silver strength was notable—while equities largely looked through the noise for now. One piece framed why markets may be more sensitive to the latest Powell-versus-White House battle, noting the jump in precious metals and the general repricing of policy risk.
Equities and sectors
Beneath the surface, leadership was mixed:
- Financials (XLF) lagged, closing at 55.28 versus 55.73 Friday, down roughly 0.81%. That underperformance is consistent with pre-earnings caution. As large banks kick off reporting this week, coverage emphasized watching key metrics—net interest income outlooks, loan growth and quality, capital returns, and commentary on regulation—especially as expectations rise for lighter supervisory pressure at the largest institutions.
- Technology (XLK) was modestly higher at 146.78 versus 146.15, up about 0.43%. News flow featured a range of AI- and infrastructure-adjacent themes: potential catalysts around Apple’s reported Gemini partnership; debates over where value accrues in AI (from chips to data centers and beyond); and mixed takes on chipmakers’ momentum and valuation. While index-level moves were incremental, the narrative remains that 2026 returns may hinge on demonstrable AI monetization.
- Health Care (XLV) inched up to 157.37 from 157.31, roughly +0.04%. One item noted a health-care name that preannounced an earnings beat but didn’t bounce, underscoring selectivity within the group.
- One additional sector entry in the payload printed 42.58 versus 42.51 previously—a small gain—though the symbol field displayed XLU while the key read XLE, making the sector label ambiguous. Directionally, that data point indicates a marginal advance in that sector ETF today.
Outside of sectors, several articles spotlighted stock-specific themes that, while not reflected in today’s ETF tape, may influence sector leadership:
- Retail and consumer: Primer pieces highlighted modest holiday sales and a rotation in retail winners, as well as increased attention on Walmart’s tech and AI initiatives following its Nasdaq-100 inclusion.
- Media: Paramount’s bid-related dispute with Warner Bros. Discovery resurfaced, with lawsuits seeking more information about comparable offers and director slates. Corporate actions and M&A intrigue remain a swing factor for media equities into 2026.
- AI infrastructure and chips: Commentaries weighed conflicting signals—from upgrades and enthusiastic policy endorsements to skepticism about the durability of AI spending. While index tech was quiet today, dispersion across subsectors could widen with earnings.
Bonds: longer duration softens
Long-dated Treasurys slipped. The 20+ year proxy TLT ended at 87.66 versus 87.93, down about 0.31%. The 7–10 year proxy IEF closed at 96.19 versus 96.30, off roughly 0.12%. Shorter duration was little changed; SHY finished near flat at 82.83. The directional take—slightly weaker prices (higher yields) toward the long end—is consistent with the idea of “stickier” inflation prints delaying cuts, wider term premia amid policy and fiscal debates, or simply investor preference for risk assets and commodities today.
Commodities: gold, silver, oil, and gas climb
The most notable moves were in precious metals:
- GLD rose to 422.18 from 414.47, up roughly 1.86%.
- SLV advanced to 77.21 from 72.38, a gain of about 6.68%.
Multiple pieces attributed the precious metals bid to a confluence of factors, including Fed-politics headlines, geopolitical tensions (with Iran and Venezuela cited), and the notion of a potential commodities supercycle. Commentary pointed out that typical explanations like “inflation hedge” alone do not capture the breadth of demand drivers for gold’s surge; structural and macro-policy concerns are also in focus. Another note emphasized that bullish positioning in gold remained resilient after a record 2025, with many managers opting not to materially reduce exposure.
Energy and broad commodities also rallied. Crude proxy USO increased to 71.66 from 70.78, up roughly 1.24%, on a flow of headlines that put Venezuela and Iran in focus. A broad commodities basket (DBC) gained about 1.25% to 23.19 from 22.90. Natural gas (UNG) jumped to 11.19 from 10.40, up nearly 7.55%, a sizable move that stands out even within today’s broadly stronger commodities complex. The combination of higher oil and gas alongside firm metals underlines that investors continue to seek real-asset exposure—both as a hedge and as a play on supply-constrained themes identified in several analyses of a potential supercycle.
FX and crypto
The euro was firmer on the day versus the dollar in the provided quote, with EURUSD marked at 1.1664; the same record lists an open at 1.1656. A marginally softer dollar is directionally supportive for dollar-priced commodities, consistent with today’s metals bid.
Crypto prices eased despite the risk-on tone in equities and commodities:
- Bitcoin (BTCUSD) was marked around 91,414 versus an open near 92,051, down approximately 0.69%, with a session range in the quote from about 89,981 to 92,296.
- Ether (ETHUSD) marked near 3,100 versus an open around 3,155, down roughly 1.76%.
The divergence suggests crypto-specific flows were negative today even as other risk and hedge assets rose.
Notable themes and company news from today’s coverage
- Fed independence debate: Reports detailed the DOJ’s criminal probe involving Chair Powell and the subsequent political reactions, including support from former Fed leaders and a Senate pledge to block potential nominees pending resolution. Markets expressed concern primarily via stronger gold and silver rather than a broad equity selloff.
- Inflation watch: A preview suggested CPI may show stickier prices, reinforcing the case for caution on early rate-cut expectations. That aligns with modest pressure on longer-duration bonds.
- Banks’ earnings: Investors are focused on net interest margin dynamics, credit quality, trading and investment banking trends, capital deployment, and regulatory tone as the largest banks prepare to report.
- Energy geopolitics: News highlighted the administration’s signals on Venezuela and related corporate considerations for U.S. oil majors. Another piece noted oil’s rise for the week not solely tied to Venezuela, as Iran-related developments remain pivotal.
- AI and Big Tech: Commentary ranged from potential catalysts for Apple’s AI strategy and a reported Gemini partnership to analyst picks across semis and infrastructure layers, as well as caution that some AI-linked valuations may have run ahead of fundamentals. Walmart’s tech push and index inclusion were also highlighted.
- Media consolidation: Paramount’s lawsuit against Warner Bros. Discovery underscored active deal dynamics. Outcomes here can shape valuations across the media landscape.
Outlook
Looking ahead, three themes dominate the near-term setup:
1) CPI and the rate path: With expectations leaning toward sticky inflation, the next CPI print will be critical for confirming whether disinflation remains on track. A hotter report would likely pressure duration and could challenge rate-sensitive equities, while an inline or cooler print might extend the equity grind higher and support a modest bond bid.
2) Bank earnings: As large banks report, watch commentary on deposit betas, loan demand, credit normalization, and fee income. Guidance on capital returns and regulatory posture will be pivotal for sector performance. Today’s XLF underperformance hints at some positioning caution.
3) Policy and geopolitical risk: Developments around the Fed probe and the broader policy agenda, as well as Middle East and Latin America headlines, can move rates and commodities quickly. The metals bid shows investors are hedging those risks.
Near-term risks
- Policy uncertainty around the Federal Reserve: Legal and political overhang could unsettle rate expectations and market confidence if it escalates.
- Inflation persistence: A stickier CPI would jeopardize near-term cut hopes, steepen the long end, and weigh on duration-sensitive assets.
- Earnings execution: Elevated expectations across AI and broader tech raise the bar for results and guidance; disappointment could drive factor rotations.
- Credit and liquidity: If growth cools while rates stay higher for longer, credit costs and defaults could pick up into 2026, pressuring financials and cyclicals.
- Geopolitical shocks: Energy supply risks tied to Iran or Venezuela could introduce further volatility in oil and, by extension, inflation expectations.
Bottom line
Today’s tape reflected a balancing act: modest equity gains led by small-caps, a soft patch for financials into earnings, firm commodities led by precious metals and energy, and slightly weaker long bonds. Inflation expectations remain largely anchored over the long run, but near-term policy and price risks are driving demand for real assets and hedges. The next catalysts—CPI data and the first wave of bank results—will test whether this cautiously risk-on posture can persist without a more material reset in rates or earnings expectations.
Equities closed modestly higher on Monday, while commodities broadly advanced and longer-duration Treasurys eased. The session was characterized by a cautiously constructive tone in stocks—particularly small-caps—contrasted with strong safe-haven and real-asset demand seen in gold, silver, crude oil, and a broad commodities basket. Financials underperformed into the start of bank earnings later this week, and rate markets were slightly softer with long bond ETFs down on the day. The backdrop remained dominated by political developments around the Federal Reserve and upcoming inflation data.
Overview and index performance
- S&P 500 proxy SPY ended at 695.16 versus Friday’s 694.07, up roughly 0.16%. Gains were steady but measured, as investors balanced macro risk with an ongoing equity uptrend.
- Nasdaq-100 proxy QQQ finished at 627.19 versus 626.65 Friday, up about 0.09%. Mega-cap tech sentiment was steady, with the group consolidating after a strong start to the year.
- Dow Industrials proxy DIA closed at 495.88 versus 495.02, up approximately 0.17%.
- Small-caps (IWM) led on the day, closing at 261.49 from 260.23, up around 0.48%, consistent with a broadening of risk appetite beyond the largest names.
Macro backdrop: yields, inflation, and expectations
Treasury yield data most recently available (as of January 8) show the 2-year at 3.49%, 5-year at 3.74%, 10-year at 4.19%, and 30-year at 4.85%. That curve configuration suggests policy-sensitive front-end rates remain well below long-dated yields, but not in a deep inversion, and emphasizes the market’s ongoing calibration of growth, inflation, and policy trajectories.
On inflation, the latest available CPI data (November) show the headline index level at 325.031 and core at 331.068. While those are index readings rather than month-on-month rates, the related news flow today emphasized the risk that inflation remains sticky near-term. One preview piece noted that this week’s CPI “likely” reflects persistent price pressure that could delay the next Fed rate cut (“Inflation hasn’t gone away. CPI likely to show sticky prices and delay next Fed interest-rate cut.”). That sentiment aligns with long-end yields hovering near 4.2%–4.9% and with the modest weakness seen in long-duration Treasurys.
Inflation expectations are mixed but broadly anchored in the longer run. A model-based 1-year expectation stands at about 3.20%, while market-implied 5-year and 10-year breakevens are approximately 2.28% and 2.24%, respectively, and the 5y5y forward sits near 2.21%. Model-based 30-year expectations are around 2.44%. Taken together, investors seem to be pricing a period of near-term stickiness, but with longer-term expectations still close to the Fed’s target range. That helps explain why equities can grind higher even as gold rallies—the market is not pricing a loss of inflation control over the long run, but it is demanding hedges against near-term uncertainty.
Fed-politics and policy uncertainty
Multiple reports highlighted the Department of Justice’s criminal probe of Chair Jerome Powell related to Fed building renovations and the broader debate about Fed independence. Past Fed chairs and senior officials publicly backed Powell’s independence, and a Republican senator indicated he would block potential new Fed nominees until the probe is resolved. Markets reacted by favoring hedges—gold and silver strength was notable—while equities largely looked through the noise for now. One piece framed why markets may be more sensitive to the latest Powell-versus-White House battle, noting the jump in precious metals and the general repricing of policy risk.
Equities and sectors
Beneath the surface, leadership was mixed:
- Financials (XLF) lagged, closing at 55.28 versus 55.73 Friday, down roughly 0.81%. That underperformance is consistent with pre-earnings caution. As large banks kick off reporting this week, coverage emphasized watching key metrics—net interest income outlooks, loan growth and quality, capital returns, and commentary on regulation—especially as expectations rise for lighter supervisory pressure at the largest institutions.
- Technology (XLK) was modestly higher at 146.78 versus 146.15, up about 0.43%. News flow featured a range of AI- and infrastructure-adjacent themes: potential catalysts around Apple’s reported Gemini partnership; debates over where value accrues in AI (from chips to data centers and beyond); and mixed takes on chipmakers’ momentum and valuation. While index-level moves were incremental, the narrative remains that 2026 returns may hinge on demonstrable AI monetization.
- Health Care (XLV) inched up to 157.37 from 157.31, roughly +0.04%. One item noted a health-care name that preannounced an earnings beat but didn’t bounce, underscoring selectivity within the group.
- One additional sector entry in the payload printed 42.58 versus 42.51 previously—a small gain—though the symbol field displayed XLU while the key read XLE, making the sector label ambiguous. Directionally, that data point indicates a marginal advance in that sector ETF today.
Outside of sectors, several articles spotlighted stock-specific themes that, while not reflected in today’s ETF tape, may influence sector leadership:
- Retail and consumer: Primer pieces highlighted modest holiday sales and a rotation in retail winners, as well as increased attention on Walmart’s tech and AI initiatives following its Nasdaq-100 inclusion.
- Media: Paramount’s bid-related dispute with Warner Bros. Discovery resurfaced, with lawsuits seeking more information about comparable offers and director slates. Corporate actions and M&A intrigue remain a swing factor for media equities into 2026.
- AI infrastructure and chips: Commentaries weighed conflicting signals—from upgrades and enthusiastic policy endorsements to skepticism about the durability of AI spending. While index tech was quiet today, dispersion across subsectors could widen with earnings.
Bonds: longer duration softens
Long-dated Treasurys slipped. The 20+ year proxy TLT ended at 87.66 versus 87.93, down about 0.31%. The 7–10 year proxy IEF closed at 96.19 versus 96.30, off roughly 0.12%. Shorter duration was little changed; SHY finished near flat at 82.83. The directional take—slightly weaker prices (higher yields) toward the long end—is consistent with the idea of “stickier” inflation prints delaying cuts, wider term premia amid policy and fiscal debates, or simply investor preference for risk assets and commodities today.
Commodities: gold, silver, oil, and gas climb
The most notable moves were in precious metals:
- GLD rose to 422.18 from 414.47, up roughly 1.86%.
- SLV advanced to 77.21 from 72.38, a gain of about 6.68%.
Multiple pieces attributed the precious metals bid to a confluence of factors, including Fed-politics headlines, geopolitical tensions (with Iran and Venezuela cited), and the notion of a potential commodities supercycle. Commentary pointed out that typical explanations like “inflation hedge” alone do not capture the breadth of demand drivers for gold’s surge; structural and macro-policy concerns are also in focus. Another note emphasized that bullish positioning in gold remained resilient after a record 2025, with many managers opting not to materially reduce exposure.
Energy and broad commodities also rallied. Crude proxy USO increased to 71.66 from 70.78, up roughly 1.24%, on a flow of headlines that put Venezuela and Iran in focus. A broad commodities basket (DBC) gained about 1.25% to 23.19 from 22.90. Natural gas (UNG) jumped to 11.19 from 10.40, up nearly 7.55%, a sizable move that stands out even within today’s broadly stronger commodities complex. The combination of higher oil and gas alongside firm metals underlines that investors continue to seek real-asset exposure—both as a hedge and as a play on supply-constrained themes identified in several analyses of a potential supercycle.
FX and crypto
The euro was firmer on the day versus the dollar in the provided quote, with EURUSD marked at 1.1664; the same record lists an open at 1.1656. A marginally softer dollar is directionally supportive for dollar-priced commodities, consistent with today’s metals bid.
Crypto prices eased despite the risk-on tone in equities and commodities:
- Bitcoin (BTCUSD) was marked around 91,414 versus an open near 92,051, down approximately 0.69%, with a session range in the quote from about 89,981 to 92,296.
- Ether (ETHUSD) marked near 3,100 versus an open around 3,155, down roughly 1.76%.
The divergence suggests crypto-specific flows were negative today even as other risk and hedge assets rose.
Notable themes and company news from today’s coverage
- Fed independence debate: Reports detailed the DOJ’s criminal probe involving Chair Powell and the subsequent political reactions, including support from former Fed leaders and a Senate pledge to block potential nominees pending resolution. Markets expressed concern primarily via stronger gold and silver rather than a broad equity selloff.
- Inflation watch: A preview suggested CPI may show stickier prices, reinforcing the case for caution on early rate-cut expectations. That aligns with modest pressure on longer-duration bonds.
- Banks’ earnings: Investors are focused on net interest margin dynamics, credit quality, trading and investment banking trends, capital deployment, and regulatory tone as the largest banks prepare to report.
- Energy geopolitics: News highlighted the administration’s signals on Venezuela and related corporate considerations for U.S. oil majors. Another piece noted oil’s rise for the week not solely tied to Venezuela, as Iran-related developments remain pivotal.
- AI and Big Tech: Commentary ranged from potential catalysts for Apple’s AI strategy and a reported Gemini partnership to analyst picks across semis and infrastructure layers, as well as caution that some AI-linked valuations may have run ahead of fundamentals. Walmart’s tech push and index inclusion were also highlighted.
- Media consolidation: Paramount’s lawsuit against Warner Bros. Discovery underscored active deal dynamics. Outcomes here can shape valuations across the media landscape.
Outlook
Looking ahead, three themes dominate the near-term setup:
1) CPI and the rate path: With expectations leaning toward sticky inflation, the next CPI print will be critical for confirming whether disinflation remains on track. A hotter report would likely pressure duration and could challenge rate-sensitive equities, while an inline or cooler print might extend the equity grind higher and support a modest bond bid.
2) Bank earnings: As large banks report, watch commentary on deposit betas, loan demand, credit normalization, and fee income. Guidance on capital returns and regulatory posture will be pivotal for sector performance. Today’s XLF underperformance hints at some positioning caution.
3) Policy and geopolitical risk: Developments around the Fed probe and the broader policy agenda, as well as Middle East and Latin America headlines, can move rates and commodities quickly. The metals bid shows investors are hedging those risks.
Near-term risks
- Policy uncertainty around the Federal Reserve: Legal and political overhang could unsettle rate expectations and market confidence if it escalates.
- Inflation persistence: A stickier CPI would jeopardize near-term cut hopes, steepen the long end, and weigh on duration-sensitive assets.
- Earnings execution: Elevated expectations across AI and broader tech raise the bar for results and guidance; disappointment could drive factor rotations.
- Credit and liquidity: If growth cools while rates stay higher for longer, credit costs and defaults could pick up into 2026, pressuring financials and cyclicals.
- Geopolitical shocks: Energy supply risks tied to Iran or Venezuela could introduce further volatility in oil and, by extension, inflation expectations.
Bottom line
Today’s tape reflected a balancing act: modest equity gains led by small-caps, a soft patch for financials into earnings, firm commodities led by precious metals and energy, and slightly weaker long bonds. Inflation expectations remain largely anchored over the long run, but near-term policy and price risks are driving demand for real assets and hedges. The next catalysts—CPI data and the first wave of bank results—will test whether this cautiously risk-on posture can persist without a more material reset in rates or earnings expectations.