Bull & Bear Bulletin- Week of January 23rd

📊 Weekly Market Recap

• S&P 500 return Year-to-date were approximately 0.99%
• S&P 500 3 month return were approximately 2.60%
• S&P 500 return over the past month were approximately -0.27%
• S&P 500 return over the past 5 days were approximately -0.45%

This Week in the Markets – 3 Things to Know

1. Trade Drama Fizzled, Markets Bounced Back – The week started off pretty shaky as tariff headlines and geopolitical noise spooked investors, but that mood didn’t last long. Midweek, markets flipped higher after Trump backed off proposed tariffs on the EU, which instantly cooled fears of another trade war spiral. That reversal gave investors the green light to step back in, especially after it became clear the earlier sell-off was more positioning and profit-taking than a real breakdown in fundamentals. Major U.S. indexes finished sharply higher as buyers returned, and the rebound felt more like relief than euphoria. Big-cap tech and growth stocks led the charge, helping pull the broader market off its lows.
   
2. Gold Stayed Strong Even as Stocks Recovered – Even with stocks bouncing back, gold didn’t exactly give up the spotlight this week. The metal stayed elevated, hovering near recent highs, which tells you investors still want some protection on the sidelines rather than going fully risk-on. That’s a pretty classic “hedge your bets” setup, own equities for upside, but keep gold around just in case volatility flares back up or macro headlines re-enter the picture. Falling volatility and steadier yields would normally pressure gold lower, but the fact that it held firm says a lot about lingering uncertainty. Other commodities saw some movement too, but gold’s recent resilience stood out the most. It’s a reminder that while risk appetite improved, investors aren’t all-in on a smooth ride ahead. Confidence is rebuilding, but caution hasn’t disappeared, it’s just being managed more deliberately.
3. Volatility Cooled, But It’s Not Gone – As the week progressed, volatility eased noticeably from earlier spikes, reflecting calmer markets and fewer surprise headlines. Measures like the VIX drifted lower as fears around tariffs and policy shocks faded, helping stocks stabilize and giving prices a little room to breathe. Fresh economic data showed the U.S. economy still growing at a solid clip, GDP expanded at a hefty annualized pace of around 4.4% in the latest quarter, one of the stronger readings in recent years, which underpins confidence that the expansion isn’t rolling over anytime soon. At the same time, labor market signals are sending mixed signals, job openings have been drifting lower, suggesting employers are cautious on hiring, even as layoffs haven’t spiked dramatically.  So while markets aren’t pricing in a fresh panic, they’re not assuming perfect clarity either, growth is holding up, but the job picture is softening, and that blend keeps volatility hanging around at manageable levels rather than vanishing.

Markets at a Crossroads

This week’s market action highlighted ongoing volatility shaped by shifting macro signals, geopolitical tensions, and headline-driven developments. Inflation readings, labor market data, consumer spending trends, and renewed trade-war uncertainty remained key inputs influencing expectations for Federal Reserve policy. Each release of words or data forced investors to re-calibrate the timing and magnitude of the market. Rather than committing to a clear direction, markets traded within defined ranges from wiping 1.5% away to gaining 1% back in seconds, reinforcing the idea that policy clarity, not momentum, remains the missing piece.

Market sensitivity has been on full display, especially in how stock prices have reacted to inflation data. When CPI started cooling toward the end of 2025, the S&P 500 pushed higher as investors leaned into the idea of easier financial conditions. More recently, sticky inflation readings have slowed that momentum, keeping investors cautious and quicker to lock in gains. This back-and-forth shows a market trading the direction of economic data rather than the data itself, which helps explain why rallies feel fragile and volatility spikes around key releases. Watching how inflation trends evolve over the next few months will be critical in determining whether markets can build sustained upside or remain stuck in this choppy pattern this year.

Looking ahead, the rest of the year presents a wide range of outcomes, from continued volatility to a more stable, fundamentally driven market. Q4 earnings reports will play an important role in narrowing that range, offering insight into how companies have managed higher rates, input costs, and shifting demand. Strong earnings and resilient margins could support a transition toward a simpler market focused on growth in Q1 of this year and fundamentals, especially if inflation continues to ease. On the other hand, earnings pressure or cautious guidance would reinforce concerns around slowing growth and keep markets reactive to macro risks. Trade tensions and global supply chain dynamics remain additional trending variables, but ultimately, economic data and corporate results will determine whether markets can move beyond this volatile phase into a more sustainable trend.

S&P 500 SECTOR SNAPSHOT – Past Week