Market Insights Summary - Edward Jones

Daily Market Snapshot (January 2, 2026)

Global equities started 2026 on a positive note, buoyed by renewed interest in AI developments in China and strong performance from U.S. small- and mid-cap stocks. Asian markets experienced gains, particularly after DeepSeek's announcement of a more efficient AI development approach, and Baidu's plans for an IPO of its AI chip unit. However, the Nasdaq struggled to maintain positive momentum despite semiconductor gains.

Silver prices continued to rise following a strong year for precious metals, while oil prices fell after experiencing their largest annual decline since 2020.

2025 Market Performance and 2026 Outlook

The year 2025 was marked by volatility but ultimately yielded significant returns for investors, with the S&P 500 achieving 39 all-time highs and an 18% return, including dividends. International markets also saw gains of around 30%.

Looking ahead to 2026, expectations remain optimistic, supported by steady economic growth, modest fiscal stimulus, and anticipated Fed easing. However, investors should be cautious of potential risks, including AI-related setbacks and ongoing inflation pressures. Earnings growth will be crucial for sustaining the bull market, which is expected to continue, with AI as a key driver alongside broader market participation.

Upcoming Economic Data

The upcoming week is set to provide a wealth of economic data, including key reports on manufacturing, payrolls, job openings, and consumer sentiment. Recent job data has shown mixed signals, with unemployment rising to 4.6%, primarily due to more workers entering the labor force. A gradual stabilization in the job market is anticipated, with monthly job gains expected to range between 50,000 and 100,000.