Market Insights Recap — Week of January 12, 2026

Hello, I'm Steve Orr, Chief Investment Officer for Texas Capital's Private Bank.

Climbing out, but still waiting. And first five in. What do these mean? And how should our portfolios be positioned?

December's payroll report was a mixed bag. 50,000 net-new jobs added during the month. It's a bit below expectations, but not as negative as feared by the hand-wringing doomsayers. The three-month average of net-new jobs remains negative, down 22,300. But that was skewed by those DOGE cuts to federal jobs. Those all took effect in October. In truth, these payroll estimates are exactly that. There's a survey, but also plenty of model plugging and plunging. Final tallies? They're not set in stone for another year or so. So once more data comes in, likely like the W2 records, we'll be fine.

Job openings are holding steady, 7.1 million. Overall, the job market is roughly in balance. Average hourly earnings continue to run at a high 3% pace, right now growing 3.8%. And that's roughly a full percent above Consumer Price Index inflation. That gives consumers some breathing room. The key for December, household employment rate fell back down from 4.6 to 4.4%. That drop likely has some shutdown effects and puts us back on average. We've not had a recession when unemployment is sub 5%. So we're not worried and see no reason to back off of our overall risk profile. 

And this report also has strong enough data to keep the Fed on hold in January. Interest rates are holding steady both at the short and long end of the yield curve. Credit spreads, both investment grade and high-yield, are near tights. They're not warning of any major turn in corporate health. 

But we are still waiting for the Supreme Court. Last week they added an extra opinion day. And most folks thought last Friday would be the day the court announced its decision on tariffs. To be more precise, the opinion will focus on whether the administration can use the International Emergency Economic Powers Act as a tool to enact tariffs. The administration is not waiting either. They're preparing to use other statutes to specifically allow tariffs and keep existing tariffs in place. We do expect a ruling from the court this week. Again, more noise, but not enough to impact change in portfolio allocations.

The stock market's not waiting around for anybody either, setting new highs last week. There was no Santa Rally at year-end. But the first five days were quite strong. Dow Industrials, S&P 500 and Russell 2000 all posted new marks on Friday. Note that the Mag 7 and Nasdaq were not invited to the party. We're seeing a broadening of the rally into staples, energy and industrials. That's the sign of a healthy market. Now, there have been 30 cases since 1953, when the S&P 500 started this strong, and three-quarters of the time, the index finished the year solidly in positive territory. 

Another reason to be optimistic? This week starts our favorite time of the quarter: earnings season. Fourth quarter earnings for S&P 500 companies should rise about 7% over 2024's fourth quarter; not bad at all, and consistent with earnings picking up this year as part of our 3% GDP growth forecast. This is big bank week. So we're going to get report cards from JPMorgan, BofA, Wells, Citigroup, Goldman Sachs, among others.

Back to the economy? This week we have December Consumer Price Index, New Home Sales and Industrial Production on tap. Consumer prices should hold steady around 2.8%. We still expect inflation to march higher later in the year. Our 42 indicator dashboard remains green, tilting towards emerging markets and value. We're staying fully invested; 'til next time.