This week on 7 Market Movers, Gary Quinzel recaps the extraordinary market events of 2025, including the 3rd straight year of double-digit gains for US equities. He also takes stock of the first full week of 2026, including the recent rotation away from technology stocks into health care and the defense sector, and the small rally in oil stocks and gold after the news of the capture of Venezuelan President Nicolas Maduro. 

Looking ahead to the rest of 2026, Gary covers the optimism around monetary policy and the potential impacts of the One Big Beautiful Bill Act on both businesses and consumers.

Watch the full video below!

TRANSCRIPT:

Hello, everyone. Welcome to the first 7Market Movers of 2026. My name is Gary Quinzel, Vice President of Portfolio Consulting here at Wealth Enhancement. Before we dive into today's Market Movers, I want to do a quick recap of 2025 because it really was an extraordinary year any way you look at it.

Starting first with US equities, it's hard to believe after the start that we had that US equities, as demonstrated by the S&P 500, would gain 18% for the year, which was its 3rd straight year of double digit returns. This past year, most of the return was actually driven by earnings expansion, so not multiple expansion as it had been in previous years. The same cannot be said if we look overseas at international stocks, which, notably outperformed the US. So if we look at the the IFA, the MSCI developed international index gained around 31%.

The emerging markets index gained around 33.5%. A lot of that, was driven by multiple expansions. So investors are feeling better, about investing overseas, and of course, the softer dollar to start the year also played a contributing factor. We're starting to notice investors feeling more optimistic about investing overseas, and a big part of that is probably because of the concentration that we are experiencing here in the US with the mega cap tech leaders.

If we look around the investment universe, it wasn't just stocks that did very, very well. Bonds did very well too as we saw interest rates generally come in. We saw the Bloomberg Aggregate Index gain around 7.5%. We saw, even Munis had a good year after a rough start gaining around 4.5%.

High yield did well. And most notably, gold, if you think about, safe haven assets, gained around 65%.

A lot of that driven by geopolitical uncertainties, and, of course, there's also a lot of central bank purchases of of gold. And so we continue to see that, ride a wave of popularity. Does feel like it's getting a little overbought, but it's a very hard thing to gauge from a time perspective. So if we take a look at what's happening right now, today's news is really focused on the Supreme Court ruling that's going to rule on whether or not the president Trump's liberation day tariffs were legal or not.

So all eyes are on that. We could see a rule ruling as soon as Friday, January 5th. Regardless of the outcome, I think just knowing where we stand is going to be beneficial, removing that layer of uncertainty. But I think more importantly, if we do see some of those tariffs ruled ruled against if if the ruling is against the tariffs, that could definitely benefit certain companies, especially those companies that do a lot of reporting. They could certainly improve margins, lower cost to consumers.

So if you're looking at sectors like staples, discretionary, industrial, certainly could see a larger impact. And we've noted that almost 1,000 companies have already lined up to potentially sue to recoup some of those losses over billions of dollars that have been levied so far in duties so far. So we'll certainly be paying attention to that. As we look at the markets in the early days of 2026, we've seen a little bit of a rotation.

I touched upon this. We're seeing more broader enthusiasm for for stocks and for the economy, but we're seeing a little bit of a rotation early on away from technology towards things like health care, towards defense stocks. We're seeing Russell 2000 small caps perform really well, and so value is outperforming growth. And notably, EM is still continuing to outperform all geographic sectors on the hopes of higher, underlying growth and, again, valuation expansion because overall valuations continue to be more attractive as a lower starting point.

So we're seeing some of that rotation, a lot of optimism around things like monetary policy. Here in the US, it is still slightly accommodative. Now we did, of course, have 3 rate cuts last year. We're not expecting that again this year, but one to two cuts is certainly possible.

If you look at the Fed futures market right now, nothing is expected in the first meeting in January. But, following that in March up to June, we could see 1 to 2 cuts. Of course, it is isn't always will be data dependent. Depends on what happens with the labor market.

Will it continue to soften? Will we have softer GDP prints, softer overall, growth numbers? That'll certainly support the case, for more cuts so that the Fed as always will remain data dependent. And if you look at the dot plot, which actually shows where the FOMC participants anticipate rates going, they're pricing in one more rate cut next or this year, I should say.

So we'll certainly pay attention to that as it helps the markets out.

Maybe more importantly, right now, as we're getting closer to as we've turned the page onto 2026 fiscal policy, because we expect that to be very accommodating here in this year, and that's because of the One Big Beautiful Bill Act, which could boost growth by some estimates up to half a percentage point. The reason for that is is because it is overall going to lock in a pro growth tax policy for the foreseeable future, which again removes a level of uncertainty that was there before. It also is going to continue to incentivize businesses to invest in their do capital spend invest in their business, do capital expenditures, and that tends to lead to productivity enhancement.

And on the other side, the flip side, the lower effective tax rates for for for taxpayers means more money in your pockets, more money for households to pay on consumer goods. So all of that lends itself to a a happier consumer and and more positive investor sentiment, which if you look at many measures, it is modestly positive. If look at AAII investor sentiment, it's still above its long term average. It has softened a little bit recently, which is kind of a good thing.

Right? You don't necessarily want to be at extreme levels that can tend to be a little bit contrarian as oftentimes that precludes a sell off. But, right now, it's kind of in that Goldilocks territory. And so, we're looking at that.

We're also looking at volatility, which is actually very, very low right now, which can suggest some level of complacency. We've seen this before, as, you know, volatility goes away, and it can often foreshadow unexpected bouts of volatility. So we will certainly, pay attention to that as well.

Last thing before we wrap up here, I just wanna touch upon the US military action that captured Venezuelan president Nicolas Maduro recently. As we often talk about geopolitical events, even the ones that are very, very significant as this one, this is probably the most significant one in Latin America in several decades, tend not to move the markets that much, at least out of the gate. And so this is this year's or this instance is no different. We've seen some reaction most notably in certain oil stocks.

They are they rallied a little bit. We've seen gold rally a little bit, and some defense stocks have done well in addition, but we're not seeing a major impact to the overall market. I think what's gonna be more interesting on the longer run is what happens. Are we gonna see political stability return to the region?

Are we going to see the new leadership come in and boost the output of Venezuela? Because right now, productivity is actually extremely low even though they have the world's largest reserves, so certainly, Hawaii's will be on that. So like anything else, we will continue to monitor this and all the other factors that move the markets.

We hope you found this insight, today's updates insightful as always.

And if you have any questions about this and what's moving the markets today, tomorrow, or into the future, please reach out to us or your financial adviser. And we hope you have a great day and a great week. Take care.

This information is not intended as a recommendation. The opinions are subject to change at any time and no forecasts can be guaranteed. Investment decisions should always be made based on an investor's specific circumstances.

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