Market Insights

Stocks are broadly gaining on optimism about government policy and the economy.

The S&P 500 rose 1.6 percent between Friday, January 2, and Friday, January 9. More than two-thirds of the index’s members advanced, along with 10 of the 11 major sectors. Small caps and cyclicals led the charge.

Housing stocks rallied after the Trump Administration said Fannie Mae and Freddie Mac will purchase $200 billion of mortgage bonds in a bid to lower rates. That lifted companies like Builders FirstSource (BLDR) and Lennar (LEN).

The White House separately proposed increasing the military budget by 67 percent to $1.5 trillion. Defense contractors including Huntington Ingalls Industries (HII), L3 Harris (LHX) and Lockheed Martin (LMT) jumped in response.

Semiconductors climbed to a new all-time high as leadership continues to move “down the stack” from high-end processors to lower-level products. Nomura Securities estimated that SanDisk (SNDK) could potentially double the prices for its 3D NAND memory chips. Lam Research (LRCX), whose equipment supports memory makers, had its biggest weekly gain in more than three years.

Microchip Technology (MCHP), a maker of simpler and cheaper integrated circuits, rallied after hiking its guidance. Intel (INTC) reached a new 22-month high after CEO Lip Bu-Tan was praised by President Trump.

Metals Keep Moving

Metals kept climbing last week. Gold and silver rebounded from pullbacks and copper made a new all-time high.

“Copper is the metal of electrification,” S&P Global Vice Chairman Dan Yergin told CNBC on Thursday. “The world is going to need a lot more copper — about 50 percent more than we have today.”

Consumer discretionaries were the top sector thanks to the gains in housing stocks and Amazon.com (AMZN), which rose the most since April.

Materials and industrials also outperformed. Energy stocks had a wild ride, jumping on optimism about Venezuela before losing ground.

The Russell 2000 was the strongest index, rising 4.6 percent to a new all-time high. That may be consistent with hopes that small caps will finally play catch-up to larger companies.

Utilities were the only major sector to lose value last week.

All told, 24 members of the S&P 500 had double-digit gains. Only five lost 10 percent or more, according to TradeStation data.

Inflation News Tomorrow

Tomorrow brings the consumer price index (CPI) for December, an important measure of inflation that could impact interest rates and risk appetite.

Most reports last week were potentially positive but they were less important.

October’s trade deficit was less than half the expected amount thanks to lower imports and higher exports. (It was also the lowest reading since June 2009.) The Atlanta Federal Reserve’s GDPNow estimate of fourth-quarter economic growth spiked from 2.9 percent to 5.4 percent in response.

Third-quarter labor productivity growth was much higher than forecasts and unit labor costs were much lower than expected. That’s potentially good news for inflation, profits and economic growth.

The Institute for Supply Management’s manufacturing index missed estimates but orders and backlogs were cited as positive for the future. ISM’s service-sector index surprised to the upside as price pressures eased. Consumer sentiment rose more than expected.

Separate reports from Cox Automotive and CNBC also suggested the macro environment continues to improve from lingering pandemic imbalances. Cox predicted a more active car-buying market as used-vehicle prices stabilize. CNBC found that real estate markets are improving as more sellers cut prices to close deals.

Charting the Market

The S&P 500 ended last week at a new record high and could be escaping from a three-month consolidation pattern.

The index has made successively higher lows since mid-November. It held 6,700 in mid-December and 6,800 at the start of January. Last week it jumped above 6,900 and stayed there. That may suggest support is inching upward.

Prices also tested their rising 8-day exponential moving average (EMA) and held, which may suggest a short-term uptrend is taking shape. The same could be true of the steadily rising moving average convergence/divergence (MACD) oscillator.

Cboe’s volatility index (VIX) made a lower high below 16 percent. The 10-year U.S. Treasury yield remained under 4.25 percent. Those intermarket signals could also support risk appetite.

Earnings could additionally spur optimism about the future. FactSet reported that Wall Street estimates see profits of S&P 500 companies up at least 10 percent each of this year’s four quarters. (Upcoming results for the fourth quarter of 2025 are expected to show growth of 8.3 percent.)

S&P 500, daily chart, with select patterns and indicators.

The Week Ahead

This week features key inflation data, the start of earnings season and a potentially big Supreme Court decision on tariffs.

J.P. Morgan’s important four-day healthcare conference begins today, which could impact companies in the industry.

Tuesday brings the key CPI inflation report at 8:30 a.m. ET. JPMorgan Chase (JPM) and Delta Airlines (DAL) report earnings.

Wednesday features the producer price index and existing home sales. Bank of America (BAC), Citi (C) and Wells Fargo (WFC) are scheduled to announce results. The Supreme Court could also issue a ruling on some of President Trump’s tariffs, although a decision isn’t certain.

Retail sales and initial jobless claims are on Thursday, along with earnings from Goldman Sachs (GS) and Morgan Stanley (MS).

Friday morning brings NAHB’s homebuilder sentiment index. State Street (STT) and Regions Financial (RF) issue quarterly numbers.