State of Market: Close 01/02/26
Stocks kick off 2026 mostly higher as small caps and cyclicals lead; precious metals extend strength while long-end yields hold above 4%
SPY and DIA advance, IWM outperforms, and QQQ slips; curve remains upward sloping with 10-year at 4.14% and 30-year at 4.81%. Gold and silver gain; oil and gas edge lower.
TendieTensor.com State of Market Close
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Equities began 2026 on a constructive, if uneven, note. At the close, the S&P 500 proxy (SPY) edged up to 683.17 from a prior close of 681.92, a modest advance that masked notable leadership shifts below the surface. The Dow proxy (DIA) outperformed with a firmer move to 483.62 from 480.57, while small caps (IWM) extended their recent relative improvement, finishing at 248.78 compared with 246.16 previously. In contrast, the Nasdaq-100 (QQQ) eased to 613.09 from 614.31, reflecting a softer tone in mega-cap growth after a dominant multi-year run.
The macro backdrop helped frame Friday’s trading. Treasury yields remain upward sloping across the curve: 2-year at 3.45%, 5-year at 3.68%, 10-year at 4.14% and 30-year at 4.81% (as of 2025-12-30). Inflation readings through November show headline CPI at 325.031 (index level) with core CPI at 331.068, while model-based inflation expectations in December stand at 3.20% (1-year), 2.42% (5-year) and 2.34% (10-year). Together, these inputs sketch a picture of inflation that has cooled from its peaks but remains a policy focus, and of a term structure that is positively sloped between the front end and the long end. Market narratives around the path of policy were informed by recently released Federal Reserve minutes that highlighted internal divisions on the pace and timing of future rate cuts and suggested rates could remain on hold for some time while the Committee evaluates progress. That messaging, combined with a 10-year yield anchored around 4.14%, offers a plausible underpinning for today’s relative bid in cyclicals and financials and some pressure on long-duration bond proxies.
Sector and factor performance were consistent with that macro mix. Financials (XLF) firmed to 54.94 from 54.77, a small but directionally supportive move as a steeper curve tends to favor net interest margins. Technology (XLK) closed at 144.28 versus 143.97, a gain, though the Nasdaq-100 ETF slipped on the day—an indication that breadth within tech may be broadening beyond the largest names or that other segments of growth faced light profit taking. Health Care (XLV) also participated, rising to 155.505 from 154.80, reflecting continued interest in defensives with earnings resilience.
In fixed income, price action reflected mixed duration dynamics. The long-bond ETF (TLT) softened slightly to 87.06 from 87.16, while the intermediate IEF eased to 96.09 from 96.16. The front-end SHY ticked up to 82.85 from 82.82. On balance, a 10-year yield around 4.14% and a 30-year near 4.81% put a mild headwind on the longest duration exposures and are consistent with a curve that is less inverted than it was earlier in the cycle (historical comparisons not provided here), a setup that often coincides with early signs of a leadership pivot toward more economically sensitive areas of the market.
Commodities presented a clear divergence. Precious metals extended their outperformance: GLD advanced to 398.31 from 396.31, and SLV climbed to 65.78 from 64.42. The day’s bid follows a year in which gold and silver delivered standout results, as highlighted in multiple features noting record-setting performances for precious metals and ongoing structural tailwinds. Meanwhile, energy was softer: USO slipped to 68.96 from 69.16 and UNG declined to 12.065 from 12.26. The broad commodity basket (DBC) nudged up to 22.405 from 22.36, suggesting strength outside of hydrocarbons helped offset oil and gas weakness. Investors continue to weigh metals’ momentum against cautionary signals such as the unusual strength of silver relative to oil that some research houses flag as stretched, even as others point to supply-demand supports and policy-related catalysts that could keep markets tight.
In foreign exchange, the euro traded modestly softer versus the dollar into the close, with EURUSD marked near 1.1714, below the session open of about 1.1751. A firmer dollar is often associated with slight pressure on commodities, though today’s mix shows gold and silver outperforming even as the euro dipped—underscoring that idiosyncratic demand for precious metals may be in play. In digital assets, crypto stabilized higher: Bitcoin (BTCUSD) hovered near 89,749 versus an open around 88,526, while Ether (ETHUSD) was marked near 3,119 against an open near 3,008. The constructive tone in crypto arrives as one high-profile health company reversed a prior decision to hold bitcoin on balance sheet, highlighting the still-evolving institutional stance toward digital assets even amid price resilience.
Company-specific headlines added important context to sector moves. In autos, Tesla faced renewed scrutiny after reports that its EV sales fell short of already low expectations and that its annual sales declined for a second year, with competition intensifying from Chinese manufacturers. Separate coverage argued China’s BYD raised the bar on EV volumes, suggesting a tougher competitive landscape ahead for Tesla. These developments keep EV price and market-share dynamics on investors’ radar as potential 2026 volatility sources for autos and suppliers.
In consumer and retail, furniture names outperformed after tariff headlines turned more supportive for the category. RH and Wayfair shares were reported higher after a delay to furniture-related tariffs, and broader coverage suggested 2026 could present a path to stabilization for parts of retail after a challenging period for consumers coping with higher living costs. More broadly, coverage of the U.S. economy pointed to a list of 2026 worries—stalled progress on inflation and signs of a shakier labor market—reinforcing the importance of earnings quality and balance-sheet strength.
Within apparel and footwear, Nike drew attention as insider stock purchases by the CEO and a board member were disclosed, an action that often signals confidence and can catalyze short-term relief in underperforming shares. In conglomerates, Berkshire Hathaway’s “golden cross” on the charts was highlighted as a bullish technical milestone, a constructive narrative as the firm navigates the post-CEO transition.
Tech remained a focal point but showed nuance. On one hand, mega-cap platforms continue to invest aggressively in AI, with Meta’s acquisition activity serving as a recent example of the arms race to secure capabilities and talent. On the other hand, several pieces questioned whether tech will continue to lead in 2026, citing ownership concentration and positioning risk. That debate seemed to play out in price action: XLK gained but the Nasdaq-100 ETF (QQQ) finished lower, a reminder that growth leadership may broaden or rotate as the macro environment evolves.
Policy and macro risks remain central to the 2026 outlook. Coverage this week highlighted the possibility of another government funding standoff as Congress returns, a scenario that could affect sentiment and delay data-dependent decision making. Fed minutes underscored a split on the pace of easing and left open the possibility of a sustained pause to assess the three cuts executed last year. Investors should monitor the interplay among inflation data (data not provided today), labor conditions, and financial conditions as the key drivers of the path of policy and the multiples the market can support.
Putting it together, today’s tape featured: small-cap and Dow leadership over mega-cap growth; financials and health care participating; long-duration bonds easing slightly as the 10-year hovered around 4.14%; precious metals extending outperformance; oil and gas softer; the dollar marginally firmer against the euro; and crypto firming. That is a mix consistent with a market exploring a broader leadership set at the start of the year while staying sensitive to policy, growth, and commodity-supply narratives.
What to watch next: breadth within equities—particularly whether small caps can sustain relative strength versus the Nasdaq-100—and confirmation from credit markets that a steeper curve can underpin bank earnings. In commodities, watch whether gold and silver can consolidate near highs without spilling over into broader financial conditions through inflation expectations. On policy, pay attention to fiscal headlines and any updates to the legislative calendar that could influence spending or shutdown risk. And in autos, monitor EV unit trends and pricing signals as competition from China remains a defining 2026 theme. For now, the path of least resistance appears to be gradual rotation and selective risk-taking rather than wholesale risk-on or risk-off, with an anchor in data-dependent policy and multi-asset crosswinds.
Equities began 2026 on a constructive, if uneven, note. At the close, the S&P 500 proxy (SPY) edged up to 683.17 from a prior close of 681.92, a modest advance that masked notable leadership shifts below the surface. The Dow proxy (DIA) outperformed with a firmer move to 483.62 from 480.57, while small caps (IWM) extended their recent relative improvement, finishing at 248.78 compared with 246.16 previously. In contrast, the Nasdaq-100 (QQQ) eased to 613.09 from 614.31, reflecting a softer tone in mega-cap growth after a dominant multi-year run.
The macro backdrop helped frame Friday’s trading. Treasury yields remain upward sloping across the curve: 2-year at 3.45%, 5-year at 3.68%, 10-year at 4.14% and 30-year at 4.81% (as of 2025-12-30). Inflation readings through November show headline CPI at 325.031 (index level) with core CPI at 331.068, while model-based inflation expectations in December stand at 3.20% (1-year), 2.42% (5-year) and 2.34% (10-year). Together, these inputs sketch a picture of inflation that has cooled from its peaks but remains a policy focus, and of a term structure that is positively sloped between the front end and the long end. Market narratives around the path of policy were informed by recently released Federal Reserve minutes that highlighted internal divisions on the pace and timing of future rate cuts and suggested rates could remain on hold for some time while the Committee evaluates progress. That messaging, combined with a 10-year yield anchored around 4.14%, offers a plausible underpinning for today’s relative bid in cyclicals and financials and some pressure on long-duration bond proxies.
Sector and factor performance were consistent with that macro mix. Financials (XLF) firmed to 54.94 from 54.77, a small but directionally supportive move as a steeper curve tends to favor net interest margins. Technology (XLK) closed at 144.28 versus 143.97, a gain, though the Nasdaq-100 ETF slipped on the day—an indication that breadth within tech may be broadening beyond the largest names or that other segments of growth faced light profit taking. Health Care (XLV) also participated, rising to 155.505 from 154.80, reflecting continued interest in defensives with earnings resilience.
In fixed income, price action reflected mixed duration dynamics. The long-bond ETF (TLT) softened slightly to 87.06 from 87.16, while the intermediate IEF eased to 96.09 from 96.16. The front-end SHY ticked up to 82.85 from 82.82. On balance, a 10-year yield around 4.14% and a 30-year near 4.81% put a mild headwind on the longest duration exposures and are consistent with a curve that is less inverted than it was earlier in the cycle (historical comparisons not provided here), a setup that often coincides with early signs of a leadership pivot toward more economically sensitive areas of the market.
Commodities presented a clear divergence. Precious metals extended their outperformance: GLD advanced to 398.31 from 396.31, and SLV climbed to 65.78 from 64.42. The day’s bid follows a year in which gold and silver delivered standout results, as highlighted in multiple features noting record-setting performances for precious metals and ongoing structural tailwinds. Meanwhile, energy was softer: USO slipped to 68.96 from 69.16 and UNG declined to 12.065 from 12.26. The broad commodity basket (DBC) nudged up to 22.405 from 22.36, suggesting strength outside of hydrocarbons helped offset oil and gas weakness. Investors continue to weigh metals’ momentum against cautionary signals such as the unusual strength of silver relative to oil that some research houses flag as stretched, even as others point to supply-demand supports and policy-related catalysts that could keep markets tight.
In foreign exchange, the euro traded modestly softer versus the dollar into the close, with EURUSD marked near 1.1714, below the session open of about 1.1751. A firmer dollar is often associated with slight pressure on commodities, though today’s mix shows gold and silver outperforming even as the euro dipped—underscoring that idiosyncratic demand for precious metals may be in play. In digital assets, crypto stabilized higher: Bitcoin (BTCUSD) hovered near 89,749 versus an open around 88,526, while Ether (ETHUSD) was marked near 3,119 against an open near 3,008. The constructive tone in crypto arrives as one high-profile health company reversed a prior decision to hold bitcoin on balance sheet, highlighting the still-evolving institutional stance toward digital assets even amid price resilience.
Company-specific headlines added important context to sector moves. In autos, Tesla faced renewed scrutiny after reports that its EV sales fell short of already low expectations and that its annual sales declined for a second year, with competition intensifying from Chinese manufacturers. Separate coverage argued China’s BYD raised the bar on EV volumes, suggesting a tougher competitive landscape ahead for Tesla. These developments keep EV price and market-share dynamics on investors’ radar as potential 2026 volatility sources for autos and suppliers.
In consumer and retail, furniture names outperformed after tariff headlines turned more supportive for the category. RH and Wayfair shares were reported higher after a delay to furniture-related tariffs, and broader coverage suggested 2026 could present a path to stabilization for parts of retail after a challenging period for consumers coping with higher living costs. More broadly, coverage of the U.S. economy pointed to a list of 2026 worries—stalled progress on inflation and signs of a shakier labor market—reinforcing the importance of earnings quality and balance-sheet strength.
Within apparel and footwear, Nike drew attention as insider stock purchases by the CEO and a board member were disclosed, an action that often signals confidence and can catalyze short-term relief in underperforming shares. In conglomerates, Berkshire Hathaway’s “golden cross” on the charts was highlighted as a bullish technical milestone, a constructive narrative as the firm navigates the post-CEO transition.
Tech remained a focal point but showed nuance. On one hand, mega-cap platforms continue to invest aggressively in AI, with Meta’s acquisition activity serving as a recent example of the arms race to secure capabilities and talent. On the other hand, several pieces questioned whether tech will continue to lead in 2026, citing ownership concentration and positioning risk. That debate seemed to play out in price action: XLK gained but the Nasdaq-100 ETF (QQQ) finished lower, a reminder that growth leadership may broaden or rotate as the macro environment evolves.
Policy and macro risks remain central to the 2026 outlook. Coverage this week highlighted the possibility of another government funding standoff as Congress returns, a scenario that could affect sentiment and delay data-dependent decision making. Fed minutes underscored a split on the pace of easing and left open the possibility of a sustained pause to assess the three cuts executed last year. Investors should monitor the interplay among inflation data (data not provided today), labor conditions, and financial conditions as the key drivers of the path of policy and the multiples the market can support.
Putting it together, today’s tape featured: small-cap and Dow leadership over mega-cap growth; financials and health care participating; long-duration bonds easing slightly as the 10-year hovered around 4.14%; precious metals extending outperformance; oil and gas softer; the dollar marginally firmer against the euro; and crypto firming. That is a mix consistent with a market exploring a broader leadership set at the start of the year while staying sensitive to policy, growth, and commodity-supply narratives.
What to watch next: breadth within equities—particularly whether small caps can sustain relative strength versus the Nasdaq-100—and confirmation from credit markets that a steeper curve can underpin bank earnings. In commodities, watch whether gold and silver can consolidate near highs without spilling over into broader financial conditions through inflation expectations. On policy, pay attention to fiscal headlines and any updates to the legislative calendar that could influence spending or shutdown risk. And in autos, monitor EV unit trends and pricing signals as competition from China remains a defining 2026 theme. For now, the path of least resistance appears to be gradual rotation and selective risk-taking rather than wholesale risk-on or risk-off, with an anchor in data-dependent policy and multi-asset crosswinds.