Wall Street closed out the first full trading week of the New Year at record levels on Friday, with the S&P 500 index ending about 34 points shy of the historic 7000 mark. A revival in the tech trade coupled with mixed labor market economic data boosted sentiment and offset geopolitical escalation. Oil prices logged gains for the week, despite the capture of Venezuelan leader Nicolás Maduro by U.S. forces.
Looking at this week’s economic data, mixed labor market data dented expectations for a Federal Reserve interest rate cut later this month. U.S. private sector employment bounced back in December 2025. Job openings fell in November 2025. On the other hand, job cuts in December 2025 dropped to their lowest level since July 2024.
For the week, the S&P 500 added 1.6%, while the Nasdaq advanced 1.9%. The Dow climbed 2.3%.
Future Wealth’s View
While it is heartening to see the market open 2026 on a high note, some of the biggest risks for stock market investors may have nothing to do with economic data or the AI trade but instead, may instead hinge on Trump’s policies and global instability that ensues. Consumer spending, tariffs, and AI spending will all factor into how the market does in 2026 but the risks of slower economic growth, higher unemployment or higher inflation could be mitigated by Fed policies while the unpredictable and rash political decisions by the Administration will likely be irreversible.
Consumer spending represents around 70% of U.S. GDP, which means this economy runs on people spending money and buying things. But, this is currently being driven by the highest income consumers in the country. In contrast, spending by middle income and lower income consumers has stagnated. An interest rate cut or two coupled with tax refunds and tax breaks could alleviate this problem. Despite higher tariffs, the US economy has held up well continuing to absorb the impact of the tariffs. Likewise, the AI trade has continued to work even though investors are beginning to question when and if these trillion dollar investments will translate into real revenues and earnings.
Which brings us to the far reaching repercussions of Trump’s actions that will likely create unpredictable and irreversible consequences. The most obvious one – US taking over Venezuela legitimizes the Russian invasion of Ukraine although Putin must be envious of how the US is able to capture a country overnight. China, now has the green light to think seriously about taking over Taiwan but again, Xi Jinping will likely come to realization that we are no longer in a world of diplomacy and are instead, in a world governed by force and strength. None of these countries are going to mess with the United States but the respect is gone and the US companies with international exposure will pay.
For the first time, the stock market may be more vulnerable to global political uncertainty than hard economic data or company earnings.