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Murphy's Market Minute | January 9, 2026
U.S. equity markets finished the week modestly higher, with the S&P 500 and Nasdaq holding near record levels. A notable development was continued rotation beneath the surface, as small-caps (Russell 2000) outperformed and cyclical and value-oriented sectors gained relative strength. Mega-cap technology remained supportive, aided by ongoing AI enthusiasm and developments showcased at CES 2026, but leadership is beginning to broaden beyond the largest names.
The most important macro developments came from labor market data, which suggested a resilient but gradually cooling economy. Initial jobless claims for the week ending January 3 rose modestly to 208,000, remaining low by historical standards and indicating layoffs are still contained. December’s nonfarm payrolls showed job growth of approximately 50,000, below expectations, with prior months revised lower. The unemployment rate unexpectedly dipped to 4.4%, while average hourly earnings increased 0.3% month over month, keeping wage growth steady but not accelerating.
Taken together, the data continues to support a “low-hire, low-fire” environment. The labor market remains stable, but softer hiring reduces pressure on the Federal Reserve to rush toward rate cuts.
Bond markets reflected this balance. Treasury yields edged modestly higher, with the 10-year yield hovering around 4.2%. Markets continue to price in a higher-for-longer rate environment, with expectations centered on only one or two cuts later in 2026 and little anticipation of near-term action. This backdrop has been supportive for financials, while remaining a headwind for more rate-sensitive assets.
Early corporate commentary and earnings previews suggested steady demand in select areas, though management teams remain cautious given uneven growth and lingering cost pressures. Commodity markets were relatively calm, with industrial metals holding steady alongside global growth expectations.
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By Elliot OmansonU.S. equity markets finished the week modestly higher, with the S&P 500 and Nasdaq holding near record levels. A notable development was continued rotation beneath the surface, as small-caps (Russell 2000) outperformed and cyclical and value-oriented sectors gained relative strength. Mega-cap technology remained supportive, aided by ongoing AI enthusiasm and developments showcased at CES 2026, but leadership is beginning to broaden beyond the largest names.
The most important macro developments came from labor market data, which suggested a resilient but gradually cooling economy. Initial jobless claims for the week ending January 3 rose modestly to 208,000, remaining low by historical standards and indicating layoffs are still contained. December’s nonfarm payrolls showed job growth of approximately 50,000, below expectations, with prior months revised lower. The unemployment rate unexpectedly dipped to 4.4%, while average hourly earnings increased 0.3% month over month, keeping wage growth steady but not accelerating.
Taken together, the data continues to support a “low-hire, low-fire” environment. The labor market remains stable, but softer hiring reduces pressure on the Federal Reserve to rush toward rate cuts.
Bond markets reflected this balance. Treasury yields edged modestly higher, with the 10-year yield hovering around 4.2%. Markets continue to price in a higher-for-longer rate environment, with expectations centered on only one or two cuts later in 2026 and little anticipation of near-term action. This backdrop has been supportive for financials, while remaining a headwind for more rate-sensitive assets.
Early corporate commentary and earnings previews suggested steady demand in select areas, though management teams remain cautious given uneven growth and lingering cost pressures. Commodity markets were relatively calm, with industrial metals holding steady alongside global growth expectations.