Markets Hold Steady Despite Volatility

Gold Soars, Growth Slows in China

The second trading week of 2026 ended with modest pullbacks across major U.S. indices, as investors absorbed a blend of geopolitical risk, inflation data, earnings, and evolving central bank expectations. While price action was relatively muted at the headline level—S&P 500 down 0.3%, Dow off 0.5%, NASDAQ marginally lower by 0.1%—beneath the surface, volatility, sector dispersion, and commodity strength painted a more complex market landscape.

Macro Drivers & Market Reactions

Despite intraday turmoil that saw U.S. indexes sell off nearly 2% on Tuesday amid renewed trade friction headlines tied to Greenland, equities stabilized by midweek. Safe haven assets outperformed, with precious metals drawing outsized inflows. Gold surged 8.4% for the week, closing above $4,980 per ounce. Silver jumped above $100 for the first time, riding a parabolic rally driven by both inflation hedging and speculative interest.

The rebound in metals coincided with persistent concerns about “sticky inflation.” November’s Core PCE, released late due to lingering effects from the recent government shutdown, came in at 2.8%, well above the Fed’s 2.0% target. That marks two consecutive months of higher-than-expected core inflation, complicating the central bank’s current rate path.

Despite inflationary pressure, futures markets priced in a 97% probability that the Fed will hold rates steady at next week’s meeting—marking what would be the first pause after three consecutive rate cuts. Bond yields moved slightly higher in response: the 2-year yield rose 12 basis points YTD to 3.60%, while the 10-year yield ticked up 7 basis points to 4.23%.