Stocks sink as tech and banks weigh on markets, new data shows 2025 was a lousy year for housing

Key Concepts

• MAG7: Refers to the seven largest US technology companies (Microsoft, Apple, Nvidia, Amazon, Alphabet/Google, Meta, and Tesla).
• Real GDP: Gross Domestic Product adjusted for inflation, reflecting the actual purchasing power of economic output.
• CPI: Consumer Price Index, a measure of the average change over time in the prices paid by urban consumers for a basket of consumer goods and services.
• Fed Independence: The degree to which the Federal Reserve can make monetary policy decisions without political interference.
• Lock-in Effect (Housing): The phenomenon where homeowners with low mortgage rates are reluctant to sell and buy new homes at higher rates, limiting housing supply.
• GSCs: Government-Sponsored Enterprises (specifically Fannie Mae and Freddie Mac) – key players in the US mortgage market.
• Delinquencies (Credit): The percentage of borrowers who are late on their loan payments.
• Early Stage Delinquencies: Initial stages of missed payments, indicating potential future credit issues.

Market Overview – January 26, 2026

The market closed lower on January 26, 2026, with major averages pressured by declines in bank stocks and big tech. The Dow Jones Industrial Average was down 0.1%, the Nasdaq Composite down 1.1%, and the S&P 500 down 0.6%. The sell-off occurred despite generally positive earnings reports from major banks.

Equity Market Performance

• Dow Jones: Down 0.1%, off the session lows.
• Nasdaq Composite: Down 1.1%, also recovering slightly from intraday lows.
• S&P 500: Down 0.6%.
• MAG7: Experienced broad-based selling pressure. Nvidia down 1.5%, Amazon down 2%, Microsoft, Meta, and Tesla also declined. Broadcom was down over 4%.
• Nasdaq 100: Reflecting the tech weakness.

Cryptocurrency Market

The cryptocurrency market bucked the broader trend, experiencing a rally driven by optimism surrounding a Senate bill.

• Bitcoin: Up over 3%.
• Ethereum: Up over 4%.

Commodity Market

The commodity market presented a mixed picture.

• Oil: Reversed course during the day, falling over 1.5% after comments from President Trump regarding Iran. Both crude and Brent crude futures moved into negative territory.
• Metals: Demonstrated strength.
  • Gold: Reached all-time highs, with futures above $4600 per ounce.
  • Silver: Also hit a new high, trading above $93 per ounce, with year-to-date gains of 31% (in just two weeks).
  • Copper: Reached new highs as well.

Economic Data & Analysis

A flurry of economic data was released, but overshadowed by market sentiment.

• Retail Sales: November retail sales showed a positive headline number, but Luke Tilly (Wilmington Trust) cautioned that correcting for inflation and previous weaker months reveals a slowing consumer. Real retail sales growth has slowed to 1.7% year-over-year, down from 4% at the start of the year. The positive retail sales were attributed to price increases in categories like clothing and sporting goods due to tariffs.
• Wholesale Inflation & CPI: Data indicates slowing inflation, supporting expectations for Federal Reserve rate cuts.
• Existing Home Sales: December saw a 5.1% increase, but full-year 2026 sales were tied for the lowest in 30 years.
• Job Growth: Slow job growth is contributing to the slowdown in consumer spending.

Expert Commentary & Perspectives

Luke Tilly (Wilmington Trust): Believes the Fed will begin cutting rates before mid-year, potentially multiple times. He highlighted the slowing consumer spending despite positive retail sales headlines. He also addressed concerns about Fed independence, noting safeguards in place and muted market reaction to the investigation of Chair Powell.

Jed Eller (Argent Capital Management): Agreed with Tilly’s assessment of the slowing consumer. He noted a divergence in consumer spending, with strong performance in premium categories (like first-class travel) but weakness in main cabin travel. He anticipates continued slow growth but a positive overall economy, driven by the accelerated compute investment cycle. He expects more than two Fed rate cuts in 2026.

Bank CEO Commentary: Brian Moynihan (Bank of America) and Jamie Dimon (JP Morgan Chase) both expressed continued optimism about the resilience of the US economy and consumer spending.

Nathan Stovall (S&P Global Market Intelligence): Attributed the bank stock sell-off to valuation rather than fundamental performance. He noted strong margin expansion, loan growth, and stable credit quality. He anticipates 10% earnings growth for banks in 2026, even with potential credit deterioration. He downplayed the impact of potential credit card rate caps proposed by President Trump, suggesting they would limit credit access for consumers.

Key Arguments & Supporting Evidence

• Slowing Consumer: Supported by slowing real retail sales growth, weak job growth, and Luke Tilly’s analysis of the retail sales data.
• Fed Rate Cuts: Justified by slowing inflation data and expectations of a moderating economy.
• Bank Resilience: Demonstrated by strong earnings reports, stable credit quality, and positive commentary from bank CEOs.
• Market Valuation: Nathan Stovall argued that the bank sell-off was primarily driven by high valuations after a strong 2025 performance.

Notable Quotes

• Jed Eller: "If you don't have that anchoring [investment thesis], you are bound to be whipped around to and fro by all the news that's being made every day."
• Luke Tilly: "We continue to see slowing inflation and we think the Fed's going to be cutting rates even before mid year."
• Nathan Stovall: "We've been in this group too. It feels like we're waking up every day waiting for the consumer to crack."

Technical Terms & Concepts

• Margin Expansion: An increase in the difference between a bank’s revenue and its costs, indicating improved profitability.
• Credit Quality: The assessment of a borrower’s ability to repay a loan.
• Delinquencies: Loans that are past due on payments.
• Lock-in Effect: The reluctance of homeowners with low mortgage rates to sell their homes, limiting housing supply.

Logical Connections

The segment flowed logically from a market overview to economic data analysis, then to expert commentary. The discussion connected economic indicators (retail sales, inflation) to market performance (bank stocks, tech stocks) and expert opinions (Tilly, Eller, Stovall). The segment also linked geopolitical events (Iran) to commodity prices (oil).

Data & Statistics

• Dow Jones: Down 0.1%
• Nasdaq Composite: Down 1.1%
• S&P 500: Down 0.6%
• Nvidia: Down 1.5%
• Amazon: Down 2%
• Broadcom: Down 4%
• Bitcoin: Up 3%
• Ethereum: Up 4%
• Gold Futures: Above $4600 per ounce
• Silver Futures: Above $93 per ounce (Year-to-date up 31%)
• Real Retail Sales Growth: 1.7% (down from 4% at the start of the year)
• Existing Home Sales (2026): Tied for the lowest in 30 years.

Synthesis & Conclusion

The market experienced a broad-based sell-off despite generally positive economic data and bank earnings. The decline was largely attributed to valuation concerns and investor sensitivity to geopolitical risks and potential policy changes. Experts remain cautiously optimistic about the economy, anticipating Fed rate cuts and continued, albeit slow, growth. The strength in commodities, particularly gold and silver, suggests a flight to safe-haven assets amid ongoing uncertainty. Investors are advised to maintain a firm investment thesis and avoid being swayed by short-term market noise.