January 2026 Market Review

Fidelity Bank – Wealth Management

Market Recap – January 2026

William J. Fennie III, CFA

Markets opened 2026 on a constructive note, with risk assets posting broad-based gains and leadership extending beyond the narrow group of stocks that dominated much of last year. U.S. equities advanced despite periods of heightened volatility, while international developed and emerging markets delivered particularly strong returns. Investor sentiment was supported by resilient corporate fundamentals, easing financial conditions, and continued confidence that economic growth can moderate without a sharp downturn.

The S&P 500 gained 1.45% in January, while small-cap stocks significantly outperformed, with the Russell 2000 up 5.35%, reflecting improving market breadth and a rotation toward more cyclically sensitive areas of the market. International equities led overall performance, as MSCI EAFE rose 5.22% and MSCI Emerging Markets advanced 8.85%. Fixed income returns were modest, while commodities delivered a strong start to the year, driven primarily by energy and metals.

Equity

U.S. equities extended their advance into January, although the path higher was uneven. Large-cap stocks posted modest gains, while small caps led the market higher, benefitting from improving risk sentiment and expectations for easier financial conditions later in the year. Market leadership broadened meaningfully, with gains spreading beyond technology into energy, industrials, financials, and other cyclical sectors.

International equities posted robust gains. Developed markets benefited from improving economic data and more attractive relative valuations, while emerging markets surged amid stronger capital inflows, supportive currency movements, and renewed interest in global growth opportunities. The strong start for non-U.S. equities reinforced the diversification benefits of global allocations following 2025 in which international markets meaningfully outperformed the U.S.

Fixed Income

Fixed income markets delivered modestly positive results in January. The Bloomberg U.S. Aggregate Bond Index rose 0.11%, as interest rates remained range-bound and income continued to be the primary contributor to returns. Treasury yields edged slightly higher over the course of the month, while credit markets remained well supported by stable spreads and solid corporate fundamentals.

Investors remained focused on the evolving policy outlook. While the Federal Reserve held rates steady during the month, markets continued to assess the timing and pace of potential future rate cuts against the backdrop of moderating inflation and fiscal uncertainty. Overall, fixed income markets provided stability amid episodic equity volatility.

Real Assets

Commodities delivered a strong start to the year. Energy prices rebounded sharply, with WTI crude oil rising 13.57%, marking its first meaningful monthly gain in several months as supply dynamics and geopolitical developments came into sharper focus. Precious and industrial metals also contributed to gains, reflecting both cyclical demand and continued interest in inflation and geopolitical hedges. Gold and Silver both garnered interest from traders, investors and speculators. Prices surged during the month and reached new highs on January 29^th with Gold hitting $5,595.47 and Silver eclipsing $121.65. However, volatility can work both ways and showed up on January 30^th. Gold fell as low as $4,690.01 and silver plummeted to as low as $73.96. Gold and Silver closed the month at $4,894.23 and $85.20, respectively.

Macroeconomics & Policy

Economic data released during January continued to point to a cooling but stable environment. The labor market remained resilient, with unemployment holding steady, while inflation showed further signs of moderation, reinforcing the view that progress ward price stability is continuing, albeit unevenly.

The Federal Reserve maintained a cautious stance, emphasizing the importance of incoming data as it evaluates the appropriate path forward for monetary policy. Policy uncertainty and geopolitical developments contributed to short-term volatility during the month, but January ultimately closed with risk assets higher and market participation broader than in recent periods.

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January  2026 Market Review is intended solely to report on various investment views held by Fidelity Deposit & Discount Bank and is distributed for informational and educational purposes only and is not intended to constitute legal, tax, accounting, or investment advice. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. Fidelity Deposit & Discount Bank does not have any obligation to provide revised opinions in the event of changed circumstances. All data is provided by Bloomberg Finance, LP and Morningstar Direct. We believe the information provided here is reliable but should not be assumed to be accurate or complete. Data, if not otherwise noted, is as of 1/31/2026. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer or recommendation to purchase or sell a security. Past performance is no guarantee of future results. All investment strategies and investments involve risk of loss and nothing within this report should be construed as a guarantee of any specific outcome or profit. Investors should make their own investment decisions based on their specific investment objectives and financial circumstances and are encouraged to seek professional advice before making any decisions. Index performance does not reflect the deduction of any fees and expenses, and if deducted, performance would be reduced. Indexes are unmanaged and investors are not able to invest directly into any index.