Weekly Market Commentary -  Jan 26, 2026

Week In Review

Major U.S. equity indices endured an erratic week as a risk-off mood took hold, driven by a collision of opportunistic trade diplomacy, sticky inflation, and a “delivery versus hype” reality check for the nascent AI sector. Volatility spiked following U.S. President Donald Trump’s announcement of a 10% tariff on eight European nations, a move tied to a renewed bid to purchase Greenland. Although the selloff was sharp, it reversed just as quickly after the administration signaled progress on a preliminary deal framework, highlighting the market's susceptibility to trade-by-headline.

Relief from trade tensions was capped by the PCE Price Index update, which increased 2.8% year-over-year, up from 2.7% the previous month. This hotter-than-expected reading may have "re-hawked" the Federal Reserve, forcing investors to price in a higher-for-longer interest rate environment and putting selling pressure on high-multiple growth stocks. Intel's disappointing guidance highlighted a supply-shaped speed bump, shifting the narrative from theoretical AI demand to production constraints and leading to a recalibration of extended AI-adjacent equity valuations. Despite a brief relief rally, the S&P 500 ultimately closed down -0.4%, unable to repress the prospect of higher rates and AI execution concerns.

This Week

Heading into the final week of January, the Federal Reserve is expected to maintain a "hawkish pause" at its first FOMC meeting, keeping interest rates steady as policymakers grapple with stubborn 2.8% PCE inflation. Earnings season resumes with results for 103 S&P 500 firms, as Microsoft and Meta attempt to validate the AI capex cycle with solid revenue gains. 3

Portfolio Themes

Market leadership is shifting from a narrow AI stock narrative to a more sustainable, index-wide recovery where the S&P 493 may finally provide the heavy lifting for total return. Simplicity offers direct indexing services that may capitalize on the broadening earnings-per-share growth trend.

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Data: Unless otherwise noted, data for charts, graphs, and tables is sourced from YCharts. Portfolio Themes idea sourced from FactSet.

1Style box returns use various Russell indices tied to specific areas of the market cap (vertical) and style (horizontal) spectrums. Indices are not typically available for direct investment, are unmanaged, and do not incur fees or expenses.

2 Index Statistics: P/E Ratio – Displays the forecasted P/E ratio of the representative index ETF. Yield - Dividend-per-share divided by current share price. Table statistics are updated weekly. MSCI indices represent broad global and international equity markets. Indices are represented by iShares ETF proxies (IVW, IVV, IVE, ACWI, and ACWX).

3 FactSet.

Past performance does not guarantee future results. Weekly commentary and investment advisory services are provided by Simplicity Wealth, LLC a SEC Registered Investment Adviser. Registration does not imply a certain level of skill or training. The information provided is for informational purposes only and does not constitute any form of advice or recommendation. The information contained within has been obtained from various sources and is believed to be accurate at the time of publication.