By Rick Schwerd | January 23, 2026

Our investment team remains committed to sharing updates and market insights to keep you informed. Please look for our next update on February 6.

Greenland Two-Step

Markets sold off sharply on Tuesday following President Trump’s renewed and more aggressive calls to acquire Greenland. Stocks posted their worst day since November. Bonds sold off as there was a “sell the U.S.” sentiment.

On Wednesday, attention shifted to the president’s speech at World Economic Forum in Davos, Switzerland. During the speech, Trump stated that he would not use force to acquire Greenland, which led markets to rally. Following the speech, Trump posted that there was a “framework for an agreement on Greenland” and indicated that a proposed increase in European tariffs would not be enacted, which contributed to the rally.

Recent headlines are a reminder that geopolitical developments can drive short-term volatility. We continue to believe the longer-term market trends remain constructive and the overall economy is healthy. However, with equity markets near all-time highs, any shift in sentiment can have an outsized effect.

Equity Markets Continue to Broaden

A year or two ago, much of the conversation centered on how a few mega-cap tech stocks were driving most of the market gains. Since late October, we’ve seen a reversal. Sectors like basic materials, industrial and energy, which lagged the overall market during the first three years of the current bull market, have performed the best since late October. The former leaders, information technology and communication services, have lagged.

Outside of Google, the much-hyped “Magnificent Seven” stocks are all flat to down since late October. Small-cap stocks, which have lagged large-cap stocks for years, are surging. The small-cap Russell 2000 index is up more than 10 percent this year and has now outperformed all other major U.S. indexes over the last 12 months.

We view this broadening as healthy for markets. Former leaders are taking a breather while previously underperforming areas are gaining investor attention as broad indexes remain at or near all-time highs. It also creates a scenario where many former market leaders are cheaper on a price-to-earnings ratio than they have been in some time, while still expected to report strong earnings growth. If these stocks come back into favor, it could drive the overall market higher.

Solid Economic Data

Last week’s November Retail Sales data came in stronger than expected. Also released last week was December’s Consumer Price Index (CPI) data, which was flat month over month. This was viewed positively by investors. Yesterday, the Consumer Price Index data for November was released, showing a slight increase but in line with expectations. Overall, the economic data continues to be “good enough” for markets and fourth quarter GDP estimates have been steadily increasing.

Looking Ahead

Earnings season is off to a strong start, but next week is likely the most important of the period. Meta, Microsoft, Tesla, Apple, Visa, Mastercard, Caterpillar and many others will report. Results are generally expected to be good, but guidance for 2026 will be critical. The Federal Reserve also meets next week. While no rate cuts are expected, guidance from the committee and Chairman Jerome Powell’s news conference will be important. Finally, the following week we get the January labor market data.

Stay warm this weekend and as always, if you have any questions or concerns regarding markets or your financial planning needs, please reach out to us at (518) 415-4401.

About the Author: With almost three decades of financial industry experience, Rick serves as a Senior Investment Officer at Arrow Bank. He oversees individual and corporate retirement plans, personal trusts, investment management accounts, foundations and not-for-profit relationships.