Geopolitics and Tariff Concerns Push Stocks Lower for Second Week

Last week was marked by volatility as investors moved cautiously ahead of this week’s Federal Reserve meeting. Wall Street struggled to find direction amidst tariff concerns and geopolitical tensions, resulting in sharp moves in key sectors, with several major market indexes ultimately ending the week lower. The Dow, the S&P 500 and the NASDAQ declined for the second straight week, impacted by disappointing corporate forecasts and geopolitical uncertainty. Toward the end of the week, a rebound in big tech, coupled with positive economic data, helped offset early-week losses. Among the market sectors, Energy, Materials and Consumer Staples outperformed, while Financials, Information Technology, Industrials and Utilities lagged. Crude oil prices extended gains for the fifth consecutive week, supported by geopolitical and supply risks.

U.S. GDP Increases to 4.4% in Q3 as Inflation Remains Steady

The economy expanded at an annualized rate of 4.4% in the third quarter of 2025, according to the latest report on gross domestic product (GDP). The third-quarter expansion was the largest since the third quarter of 2023. The increase in GDP in the third quarter reflected increases in consumer spending (3.5%), exports (9.6%), government spending (2.2%) and investment, which moved from -13.8% in Q2 to 0.0% in Q3. Imports, which are a subtraction in the calculation of GDP, decreased 4.4%.

Due to the recent government shutdown, the January 22, 2026, report on Personal Income and Outlays covers October and November, and it replaces releases originally scheduled for November 26 and December 19, 2025. From the preceding month, the PCE Price Index increased 0.2% in both October and November. Excluding food and energy, the PCE Price Index also increased 0.2% in both months. From the same month one year ago, the PCE Price Index increased 2.7% in October, followed by an increase of 2.8% in November. Excluding food and energy, the PCE Price Index also increased 2.7% in October, followed by an advance of 2.8% in November.

Eye on the Week Ahead

The Federal Open Market Committee (FOMC) meets this week. The odds are slightly in favor of the FOMC maintaining interest rates at their current level, although it would not be a surprise if the Committee decided to lower rates another 25.0 basis points.