During January 26-30, 2026, U.S. financial markets experienced significant volatility, with the VIX once again higher. While major indices like the S&P 500 hit record highs early in the week, they ended mostly lower or flat by Friday. The S&P 500 managed a modest 0.3% weekly gain, but the Nasdaq declined 0.17%, and the Dow Jones fell 0.42%. This reversal was primarily driven by renewed concerns over AI spending sustainability, particularly after Microsoft reported increased AI expenditures.
The week's most dramatic movement occurred in precious metals, which experienced a massive collapse on Friday after reaching all-time highs. Gold plummeted 10% and silver 26%, their worst daily performance since the 1980s. The metals closed 2% and 17% lower for the week, respectively. Bitcoin also declined more than 10% for the week, following its current correction pattern. This sharp drop was triggered by a significant rebound in the U.S. dollar following Trump's nomination of a potentially more hawkish Fed Chair.
Fixed income markets remained relatively stable throughout the volatility, with 10-year Treasury yields holding steady around 4.24%. The Federal Reserve kept interest rates unchanged as expected, but confirmed a more data-dependent stance going forward. Despite that, and the new Fed chair appointment, markets continue to price in 50bps of rate cuts this year. On the political front, oil rose to a 5-month high amid concerns over Iran.
