The final trading week of January was consequential. The main event for this week was the Federal Reserve’s rate decision that was made on Wednesday. President Trump also announced his likely nominee for Fed Chair this week while the Price Producer Index (PPI) for December was released on Friday morning.
On Wednesday, the Fed decided to keep interest rates at roughly 3.75 percent. This was the first pause in several months and may be the first of many pauses in 2026. During the Fed press conference following the decision, it was noted that the economy was showing signs of improvement.
As has been the case over much of the past few years, the Fed maintains that future monetary policy decisions will depend on the data. The thought is that the current rate is at the top end of the neutral range. It also likely means that the Fed won’t see a need to rush in relation to further easing unless something drastic happens. However, the market continues to price in further cuts in 2026 despite recent guidance from Jerome Powell and others.
Thursday saw the release of unemployment claims for the past seven days. Over that period, there were 209,000 claims compared to an expected 206,000 requests for benefits. This week’s figure was slightly lower than the 210,000 claims made in the prior week.
On Friday, the PPI for December revealed that prices rose 0.5 percent during the final month of 2025. Analysts expected prices to rise by 0.2 percent prior to the release, which was what happened in November. Core PPI increased by 0.7 percent compared to an expected increase of 0.2 percent and flat growth in November.
Generally speaking, an increase in the PPI means that there could be an increase in overall prices soon. Therefore, it’s possible that inflation will continue to remain sticky over the next few months.
The S&P 500 spent another week essentially meandering as it closed down 0.14 percent, which was a loss of just over nine points. For the first month of the year, the index is up just 0.37 percent following a year in which it registered double-digit growth. Over the last five trading days, it made a high of 7,001 on Wednesday morning and a low of 6,882 on Thursday morning.
The Dow as also down this week, losing 321 points to finish Friday’s trading at 48,892. That was a loss of 0.65 percent for the past five days for another index that has been somewhat sluggish in January. It has gone up just over 364 points since the start of the new year. For the week, the market made a high of 49,480 on Monday before reversing and making a low of 48,533 on Friday.
Finally, the Nasdaq was down 0.53 percent this week fueled mostly by a dismal day on Friday that saw the index lose 331 points. Over the past five days, the index shed 136 points, and for the month, it was up 125 points, which was a gain of about 0.5 percent. This week, the index made a high of 26,126 on Wednesday and a low of 25,458 on Thursday.
In international news, Australia announced on Tuesday that inflation increased 1 percent over the past month, which equates to 3.8 percent on an annualized basis. On Wednesday, Canada decided to hold its main interest rate at 2.25 percent. On Thursday, Japan announced that its inflation rate was 2 percent on an annualized basis. Friday, Canada announced that its GDP was flat during December.
On Monday, the ISM Manufacturing PMI will be released. Tuesday sees the release of the JOLTS report for January. On Wednesday, the ISM Services PMI comes out as well as the ADP nonfarm payroll report. Unemployment claims data will be made public on Thursday while the Bureau of Labor Statistics (BLS) releases its version of the nonfarm payroll report on Friday.