Monthly Market Report β January 2026
Report Date: February 5, 2026
Period: January 1β31, 2026
Author: Ohm Market Intelligence
1. MARKET PERFORMANCE SUMMARY
US Equity Indices
| Index | Jan 2026 Return | YTD | Jan 31 Close (approx) |
|---|---|---|---|
| S&P 500 | +1.5% | +1.5% | ~6,930 |
| Dow Jones Industrial Average | +1.8% | +1.8% | ~48,900 |
| Nasdaq Composite | +1.0% | +1.0% | ~23,400 |
| Russell 2000 | +5.4% | +5.4% | β |
| MSCI Emerging Markets | +8.9% | +8.9% | β |
| MSCI EAFE | +5.2% | +5.2% | β |
Key Narrative: A tale of two markets. While headline US indices posted modest gains, the real story was the massive rotation into value, small caps, energy, and international markets. The Russell 2000 (+5.4%) crushed the Nasdaq (+1.0%), and emerging markets (+8.9%) obliterated the S&P 500 (+1.5%). Russell 1000 Growth finished negative at -1.6% while Russell 1000 Value surged +4.5%. This is the most decisive value/international rotation since early 2022.
The S&P 500 hit all-time highs mid-January before dipping into month-end, triggered by Microsoft's cloud deceleration spook and the late-January precious metals crash.
US Sector Performance (January)
| Sector | Jan Return | Note |
|---|---|---|
| Energy (XLE) | +14.2% | Blowout month, Venezuela/Iran geopolitics |
| Materials (XLB) | +8.6% | Commodity boom |
| Consumer Staples (XLP) | +7.5% | Defensive rotation |
| Industrials (XLI) | +6.7% | Capex cycle |
| Real Estate (XLRE) | +2.7% | Rate stability |
| Communication Services (XLC) | +2.0% | |
| Consumer Discretionary (XLY) | +1.5% | |
| Utilities (XLU) | +1.3% | |
| Health Care (XLV) | 0.0% | Flat |
| Technology (XLK) | -0.1% | Essentially flat |
| Financials (XLF) | -2.4% | Worst sector |
Opinion: Energy's +14.2% is extraordinary. The combination of US strikes on Venezuela, Iran tensions, winter storms, and OPEC discipline created a supply-squeeze narrative. Technology flat-lining while energy soars is a regime shift signal. Financials being the worst performer despite a steepening yield curve is puzzling and likely reflects valuation compression after a massive 2024 run.
Top & Bottom S&P 500 Performers
Winners: SanDisk (+142.8%), Moderna (+49.4%), Seagate (+48.0%), Micron (+45.4%), Western Digital (+45.3%), Lam Research (+36.4%), Lockheed Martin (+31.1%)
Losers: AppLovin (-29.8%), Intuit (-24.7%), Humana (-23.8%), ServiceNow (-23.6%), Constellation Energy (-20.5%), The Trade Desk (-20.1%), Salesforce (-19.9%)
Pattern: Storage/memory/semis dominated the winners (AI data center demand). Software names got destroyed β the market is punishing high-multiple SaaS while rewarding hardware plays.
Cryptocurrency
| Asset | Jan Close | Jan Change | Peak β Trough |
|---|---|---|---|
| Bitcoin (BTC) | ~$78,621 | -10.6% | $97,838 β $75,993 (-22.3%) |
| Ethereum (ETH) | ~$2,445 | -18.1% | 5th consecutive monthly loss |
| Solana (SOL) | ~$93 (Feb 5) | ~-35% from Jan high | $146 β ~$93 |
| Total Crypto Market Cap | $2.84T | -7.2% |
Bitcoin: Fourth consecutive monthly decline β the longest losing streak in ~7 years. BTC's -22.3% peak-to-trough drawdown within January was brutal. Realized volatility hit 43.9% annualized. US spot BTC ETFs posted -$1.61B net outflows in January with $87B traded value. Massive liquidation cascades: $1.7B on Jan 30, then $2.56B on Jan 31 β longs getting destroyed.
Ethereum: Down -18.1% in January (5th consecutive monthly loss). ETH fell below $2,500 with RSI-14 in the mid-20s. Tether (USDT) could potentially flip ETH as the #2 crypto by market cap β a remarkable bearish signal.
Solana: Despite the price decline, on-chain activity surged. Daily token launches hit 45.5K (Jan 30), DEX volume grew ~20% MoM, active addresses jumped from 67.5M to 81M. The PENGUIN memecoin sparked a revival, hitting $150M market cap.
Opinion: Crypto is in a bear phase driven by: (1) Fed hawkishness at 3.5-3.75%, (2) ETF outflow headwinds, (3) risk-off geopolitics, and (4) tariff uncertainty. The BTC-S&P correlation is tightening, making decoupling unlikely. The structural support from institutional adoption remains, but near-term price action is ugly. Watch for $75K BTC as critical support.
Currencies
| Pair | Jan 2 | Jan 31 | Change |
|---|---|---|---|
| EUR/USD | ~1.1780 | ~1.1639 | -1.2% (USD strengthened) |
| EUR/HUF | 384.18 | 381.31 | -0.75% (HUF strengthened) |
| DXY (USD Index) | β | β | USD recovering from 10%+ decline since early 2025 |
EUR/USD: The euro weakened through January despite the broad 2025 USD weakness narrative. The dollar staged a late-month comeback, gaining 1.5-2.5% against most rivals, driven by growing confidence in incoming Fed Chair Kevin Warsh's credibility and relative US economic strength.
EUR/HUF: The forint strengthened modestly, moving from 384.18 to 381.31 (HUF gained ~0.75%). Monthly range: 380.01 (low, Jan 27) to 387.05 (high, Jan 12). The HUF benefited from higher carry amid ECB dovishness (ECB at 2.15% vs MNB still relatively high).
Commodities
| Asset | Jan End (approx) | Jan Change | Note |
|---|---|---|---|
| Gold (XAU/USD) | ~$4,700* | +9.0% net | Hit $5,400+, then crashed 10-12% on Jan 30-31 |
| Silver (XAG/USD) | β | Volatile | Crashed 31.4% on Jan 31 (worst since 1980) |
| WTI Crude Oil | $62.52/bbl | +4.1% (last week) | Geopolitical premium |
Gold & Silver β The Story of January 2026: Gold broke $5,000 for the first time on January 26, surging past $5,400 by Jan 29. Then came the most dramatic precious metals crash in decades:
- Gold dropped $380 (7%) in 28 minutes on Jan 29
- By Jan 30-31, gold had fallen 10-12% β worst single-day drop since 1983
- Silver crashed 31.4% β worst day since Hunt Brothers collapse in 1980
Triggers: (1) Exchange margin hikes, (2) Kevin Warsh (new Fed Chair) seen as more hawkish/credible, (3) profit-taking after gold doubled since Jan 2025 (+105%), (4) silver up 301% since Jan 2025 was simply unsustainable.
Despite the crash, gold still finished January up ~9%. The USD's 10%+ decline since early 2025, rising national debt, and trade tensions continue supporting the structural bull case.
Oil: WTI around $62.52/bbl, boosted by US-Venezuela strikes, Iran tensions, and winter storms. Energy sector was January's top performer at +14.2%.
Fixed Income & Bonds
| Metric | Jan 2 | Jan 30 | Change |
|---|---|---|---|
| US 10-Year Yield | 4.19% | 4.26% | +7 bps |
| US 2-Year Yield | 3.47% | 3.52% | +5 bps |
| US 30-Year Yield | 4.86% | 4.87% | +1 bp |
| 10Y-2Y Spread | +0.72% | +0.74% | Widening (steepening) |
| 1-Month T-Bill | 3.72% | 3.72% | Unchanged |
Analysis: Yields ticked higher across the curve, with the 10Y gaining 7bps and intramonth touching 4.30% on Jan 20. The curve continued steepening β the 10Y-2Y spread widened from +72bps to +74bps. This steepening reflects the market pricing in growth resilience and diminishing expectations for aggressive Fed cuts. The curve hit its widest point around Jan 20 when 10Y spiked to 4.30%.
The short end remained anchored near the Fed's target range floor, with 1-month T-bills steady at 3.72%. Markets are pricing just an 11% chance of a rate cut at the March FOMC meeting.
VIX (Volatility Index)
| Metric | Value |
|---|---|
| Jan Range (est.) | ~14β21 |
| Jan 30 Close | ~17 |
| Feb 5 Current | 16.22 |
VIX remained relatively contained despite the late-month volatility in precious metals and crypto. The equity market's muted response to the gold crash suggests equity investors viewed it as a positioning unwind rather than a systemic event.
2. MACRO ENVIRONMENT
Federal Reserve Policy
- Rate Decision (Jan 28): Held at 3.5%β3.75% (unanimous expectations met)
- Two dissenters preferred a 25bp cut β notable dovish dissent
- Powell's key quote: "Hard to look at the data and say that policy is significantly restrictive right now"
- The Fed raised its assessment of economic growth and eased concerns about labor market weakness
- Three 25bp cuts in 2025 (Sep, Nov, Dec) β now on pause
- Kevin Warsh nominated as next Fed Chair (takes office May 15, 2026) β seen as potentially hawkish, rules-based
- Market pricing: Only 11% chance of a March cut; consensus expects 1 more cut in 2026 (summer)
- Fed December projections: Terminal rate of ~3.1% by 2028 with inflation at 2% target
Inflation
| Metric | Value | Trend |
|---|---|---|
| CPI (Dec 2025 YoY) | 2.7% | Down from 3.0% (Sep) |
| Core CPI (Dec 2025 YoY) | 2.6% | Improving |
| CPI MoM (Dec) | 0.0% (unchanged) | Benign |
| Chained CPI (C-CPI-U) | +2.5% YoY | Closer to target |
Opinion: Inflation is trending in the right direction β 2.7% headline CPI is the lowest since July and below the 3.1% forecast. Core at 2.6% is encouraging. However, tariffs (now at 14% weighted average β highest since 1946) are a massive upside inflation risk that hasn't fully flowed through yet. Yale Budget Lab projects tariffs could shave 0.4pp off GDP and push unemployment up 0.7pp.
Employment
- December NFP: Missed expectations by 23,000 jobs
- Unemployment rate: Continued trending lower for 2nd consecutive month
- Late 2025 avg monthly payroll gains: ~22,000 (far below 168,000 avg in 2024)
- Pattern: Weakness stems from subdued hiring, not widespread layoffs β "soft landing" narrative intact
- 2026 consensus: ~67,000 avg monthly job growth expected
- Small business hiring: Recent uptick reported
- BLS benchmark revision: Massive -911,000 (-0.6%) for March 2025 nonfarm payrolls β prior data was overstating employment
GDP & Growth
- Atlanta Fed GDPNow Q4 2025: +5.4% (massive)
- The US economy continues to grow above trend
- Consumer spending remains robust
- Housing prices falling, but existing home sales spiked +5.1% MoM
Consumer Confidence & PMI
- Consumer spending remains robust despite mixed sentiment signals
- Manufacturing PMI showing improvement in Europe (approaching positive territory)
- Eurozone inflation at just 1.7% β lowest since late pandemic (spring 2021)
- ECB holding at 2.15%, under pressure to cut further to stimulate growth
3. STRUCTURAL THEMES
AI/Tech CapEx Arms Race
The AI infrastructure spend has reached staggering proportions:
- Meta: Guided $115β135B capex for 2026 (up from $72.2B in 2025) for "Meta Superintelligence Labs" β nearly double YoY
- Big 5 combined (Meta, Alphabet, Amazon, Apple, Microsoft) spent $383B in capex in 2025, up $45B YoY
- Microsoft Q2 FY2026: Revenue +17% YoY, Azure +39%, Cloud surpassed $50B quarterly revenue. But Azure growth decelerated from 40% β 39%, spooking investors and sending MSFT down ~10%
- Tesla Q4 2025: Revenue $24.9B, slight earnings beat. Announced Model S/X production ending in Q2 2026.
- Key tension: Market is punishing software companies (-20% to -30% drops for NOW, CRM, INTU) while rewarding hardware/infrastructure plays (storage stocks up 40-140%). The market is differentiating between AI capex beneficiaries (hardware) and potential AI victims (legacy SaaS).
Opinion: The $115-135B Meta capex guidance is jaw-dropping. The AI spend race is accelerating, not decelerating. But the market's tepid response to Azure deceleration (39% vs 40%) shows how razor-thin the margin for error is at these valuations. Forward S&P P/E at 22.2x (above 5-year avg of 20.0x) leaves no room for disappointment.
Crypto Regulation & Structure
- Kevin Warsh's appointment as Fed Chair could bring a more rules-based framework β potential medium-term positive for crypto regulation clarity
- Institutional BTC ETF outflows of $1.61B in January suggest profit-taking and risk reduction, not structural abandonment
- Bitcoin's correlation with US equities continues strengthening β making regulatory framework clarity more important than ever
- TRON hit 100M active addresses (ATH), stablecoin market cap on TRON hit $84.5B ATH β the stablecoin layer is flourishing even as speculative assets decline
Geopolitics
- US-Venezuela: US military strikes in early January sent oil prices higher and defense stocks (Lockheed Martin +31.1%) surging
- US-Iran: Late-January tensions triggered risk-off across crypto and contributed to the precious metals crash
- Trump Tariffs: The most significant macro risk factor:
- Weighted average applied tariff rate: 14% (highest since 1946)
- 50% on metals, 25% on semiconductors/autos, 10-40% reciprocal tariffs
- Yale Budget Lab: -0.4pp GDP, +0.7pp unemployment, -1.3M jobs projected in 2026
- Government partial shutdown over DHS/ICE funding
- European geopolitics: UK inflation at 3.4%, potential leadership challenge to Keir Starmer (Epstein-Mandelson revelations)
Energy
- US strikes on Venezuela created supply uncertainty
- Iran tensions added geopolitical premium
- Winter storms disrupted supply chains
- OPEC+ discipline maintained
- Energy sector was January's standout at +14.2%
- Oil companies reaching record highs; rising defense stocks benefiting from geopolitical tensions
4. Q4 2025 EARNINGS SEASON
Scorecard (as of January 30, ~33% reported)
| Metric | Actual | 5-Year Avg | 10-Year Avg |
|---|---|---|---|
| EPS Beat Rate | 75% | 78% | 76% |
| EPS Surprise Magnitude | +9.1% | +7.7% | +7.0% |
| Revenue Beat Rate | 65% | 70% | 66% |
| Revenue Surprise Magnitude | +1.2% | +2.0% | +1.4% |
| Blended EPS Growth (YoY) | +11.9% | β | β |
| Blended Revenue Growth (YoY) | +8.2% | β | β |
Key Takeaways
- Fifth consecutive quarter of double-digit EPS growth (11.9%) β started at 8.3% expectation, beaten up to 11.9%
- EPS beat rate (75%) is below average β companies are beating, but fewer are doing so vs. history
- Earnings surprise magnitude (+9.1%) is above average β those that beat, beat big
- Revenue beats (65%) are soft β below both 5-year and 10-year averages
- Revenue growth at 8.2% would be the second-highest since Q3 2022
- IT, Industrials, Communication Services driving the upside surprises
- Health Care is the weakest sector for earnings
- Energy is the only sector with declining revenues (but soaring stock prices on supply dynamics)
- Forward P/E at 22.2x β above 5-year (20.0x) and 10-year (18.8x) averages
Forward Estimates
- Q1 2026E: +11.7% earnings growth
- Q2 2026E: +14.9% earnings growth
- CY 2026E: +14.3% earnings growth
- Forward P/E: 22.2x
Notable Big Tech Reports
- Microsoft (MSFT): Q2 FY26 revenue $76.4B (+17%), Azure +39% (decelerated from 40%), EPS $3.65 vs $3.37 est. Stock fell ~10% on slowing growth fears
- Meta (META): Beat Q4, massive $115-135B capex guidance for 2026, "Superintelligence Labs" rebranding. Stock rallied
- Tesla (TSLA): Q4 revenue $24.9B, slight beat. Ending Model S/X production Q2 2026
- Apple (AAPL): P/E consensus for FY2026 compressed to 17x from 25x β the market is resetting expectations
5. FEBRUARY 2026 OUTLOOK
Scheduled Events & Data
| Date | Event |
|---|---|
| Feb 6 | Michigan Consumer Sentiment |
| Feb 6 | January NFP + Annual Benchmark Revisions |
| Feb 11 | US Non-Farm Payrolls (if rescheduled) |
| Feb 12 | UK GDP |
| Feb 13 | US CPI (January 2026) |
| Feb 17 | UK Unemployment/Earnings; ZEW Economic Sentiment |
| Feb 18 | UK Inflation; FOMC Minutes (January meeting) |
| Feb 20 | Global PMIs |
| Week of Feb 2-6 | ~127 S&P 500 companies reporting Q4 |
| Ongoing | Earnings season continues (peak week) |
Key Earnings to Watch
- Remaining Mag 7: Amazon, Alphabet, Nvidia (fiscal Q4)
- Financials, Healthcare, Consumer names
- 127 S&P 500 companies reporting in early February week (4 Dow components)
Technical Levels
| Index | Support | Resistance |
|---|---|---|
| S&P 500 | 6,800 (50-DMA) | 7,000 (psychological) |
| Nasdaq | 23,000 (50-DMA region) | 24,000 |
| Bitcoin | $75,000 (Jan 31 low) | $90,000 (Jan FOMC pre-selloff) |
| Gold | $4,200 (crash support) | $5,000 (psychological barrier) |
| 10Y Yield | 4.00% | 4.40% |
Scenario Analysis
π Bull Case (25% probability)
- January CPI continues improving toward 2.5%
- Earnings season maintains 11%+ growth with strong guidance
- Fed signals openness to summer cut
- Tariff fears subside / negotiations progress
- Gold stabilizes, crypto finds a floor
- S&P 500 target: 7,200+ by end of February
βοΈ Base Case (50% probability)
- Mixed data: inflation sticky around 2.6-2.8%, jobs moderate
- Earnings solid but priced in; tech valuations compress modestly
- Fed holds, reiterates data-dependence
- Tariff uncertainty continues but no new escalation
- Value/international outperformance continues
- S&P 500 range: 6,800β7,050
π» Bear Case (25% probability)
- CPI surprises to upside (tariff passthrough starts showing)
- Warsh nomination triggers hawkish repricing
- Geopolitics escalate (Iran, Venezuela)
- BTC breaks below $75K, triggering more crypto liquidations
- Earnings season guidance disappoints on tariff/macro uncertainty
- Mid-term year seasonality kicks in (historically weakest year of presidential cycle, +4.6% avg)
- S&P 500 target: 6,500β6,700
February Risks & Opportunities
Risks:
1. Tariff inflation passthrough β January CPI (Feb 13) could be the first report showing tariff effects
2. Fed Chair transition uncertainty β Warsh appointment process
3. BLS benchmark revisions (Feb 6) β could materially alter the employment picture
4. Precious metals volatility spillover β gold's 10% crash could trigger margin calls elsewhere
5. Mid-term year seasonality β February has historically been the S&P 500's worst month, averaging +0.1% over 35 years
Opportunities:
1. International/EM rotation β EM up 43.7% 1Y, momentum accelerating
2. Value over Growth β the rotation has legs; Russell 2000 Value +7% vs Russell 1000 Growth -1.6%
3. Energy β structural supply squeeze with geopolitical premium
4. Earnings beats β magnitude above average suggests underlying corporate strength
5. Gold post-crash β if structural thesis holds (weak USD, debt, geopolitics), the crash is a buying opportunity
INVESTMENT OPINION
January 2026 was a regime rotation month. The market is telling us:
- Growth β Value: Software names are being punished while hardware/infrastructure thrives
- US β International: EM +8.9% vs S&P +1.5% β massive
- Equities β Commodities: Energy +14.2%, gold +9% (despite crash)
- Large Cap β Small Cap: Russell 2000 +5.4% vs S&P +1.5%
The AI trade is evolving. It's no longer "buy any tech stock." The market is rewarding companies that build AI infrastructure (storage, semis, data centers) and punishing companies that might be disrupted by AI (traditional SaaS). Meta's $135B capex guidance is the clearest signal: the hyperscalers are going all-in, and the market is differentiating between who benefits and who gets disrupted.
The biggest risk nobody is talking about is the tariff inflation passthrough. At a 14% weighted average rate (highest since 1946), the inflationary impulse hasn't fully materialized in CPI data yet. When it does, the Fed's hands are tied β they can't cut into rising inflation, creating a potential stagflationary squeeze.
Positioning for February: We favor a barbell approach β overweight energy/commodities and quality international exposure, paired with select AI hardware names. Underweight premium-valuation SaaS and consumer discretionary. Gold post-crash at ~$4,700 is interesting for a tactical re-entry if the structural thesis holds.
The January Barometer is positive β historically, when January is positive, the full-year S&P return averages 12.5-15% and is positive 84% of the time. But this is a mid-term election year, historically the weakest of the presidential cycle (+4.6% avg). These two signals are in tension, and we lean toward the base case of moderate returns with elevated volatility.
Report compiled from: FactSet, YCharts, AlphaNode, CryptoRank, US Treasury, BLS, Federal Reserve, Reuters, CNBC, JP Morgan, S&P Global, Investopedia, various market sources.
Disclaimer: This is an analytical report for informational purposes only, not investment advice.