Weekly Capital Markets Watch

US equities finished a volatile, holiday-shortened week lower. The S&P 500 fell 0.35%, the Dow Jones Industrial Average declined 0.53%, and the Nasdaq Composite closed slightly lower. Mid-caps underperformed, with the S&P MidCap 400 down 0.55%. Markets were closed Monday for Martin Luther King Jr. Day. Stocks sold off sharply on Tuesday after President Trump threatened new tariffs on European countries opposing U.S. control of Greenland, reviving global trade-war concerns. Losses were partly reversed on Wednesday after Trump said a framework deal had been reached with NATO and the planned tariffs would not proceed.

US economic data remained mixed but broadly resilient. The Bureau of Economic Analysis revised 3Q GDP growth up to 4.4% annualized, driven by stronger exports and investment. Inflation remained elevated: core PCE rose 0.2% m/m in November and 2.8% y/y, still above the Fed’s 2% target.
Labor market data showed stability, with weekly jobless claims at 200,000 and the four-week average at a two-year low. Consumer sentiment improved in January but remained more than 20% below year-ago levels. Corporate bonds outperformed Treasuries amid steady macro-optimism.

European equities declined amid renewed trade and geopolitical uncertainty. The STOXX Europe 600 fell 0.98%. Major markets were weaker, led by Italy’s FTSE MIB (-2.11%), Germany’s DAX (-1.57%), France’s CAC 40 (-1.40%), and the UK’s FTSE 100 (-0.90%).