For this month’s chart of the month, we review how two identical salaries can lead to very different retirement lifestyles. The decisions you make in your peak earning years are just as important as the size of your paycheck. One of the most significant risks is lifestyle creep, which is the tendency for everyday spending to rise alongside income. How you manage a salary raise today can have a significant impact on your long-term financial security. Without a strategy for handling salary increases, even a high-earning household can find itself ill-prepared for the future.

This week, stocks traded sideways before a late-week sell-off. The S&P 500 gained +0.5%, but it continued to lag the Russell 2000 and Equal Weight S&P 500. It is now underperforming both indices by over -5% YTD, while the Nasdaq and Large Cap Growth are down over -2% YTD as investors rotate and market leadership broadens. International stocks extended their gains, with developed and emerging markets rising by more than 4% as the U.S. dollar weakened. Gold and oil were modestly lower, and the VIX rose above 20 amid AI-related volatility.

This month, we review economic data that continues to highlight a widening gap between how people feel and how the economy is performing. Measures of real activity, such as retail sales and industrial production, indicate the economy ended 2025 with solid momentum. In contrast, consumer confidence fell to multi-year lows, driven by concerns about inflation, job security, and geopolitical uncertainty, and the manufacturing conditions index remained in contraction. Despite weak consumer and business confidence, data that measures actual spending and economic activity are supportive of continued growth.

This week, markets were mixed as the rotation away from mega-cap stocks paused. The S&P 500 traded higher early in the week, briefly crossing the 7,000 level for the first time before a late-week pullback left it flat. Energy was the top-performing sector as oil rose to a 5-month high, while defensive sectors underperformed, led by Health Care. In the bond market, Treasury bonds posted modest gains as interest rates drifted lower, while corporate bonds traded lower amid widening credit spreads. A weaker US dollar boosted international stocks and commodity prices, with oil, gold, copper, and silver prices all surging.

This week, markets were choppy as policy headlines drove shifts in risk sentiment. Tariff-related developments sparked early-week volatility, though conditions stabilized as concerns eased. Major equity indexes like the S&P 500 and Nasdaq finished the week little changed, but leadership continued to rotate beneath the surface. Small-cap, value, and equal-weight indexes outperformed, while technology stocks and the growth factor weighed on market-cap-weighted benchmarks. In fixed income, Treasury yields rose across the curve, driving bond prices lower. Corporate credit spreads remained extremely tight by historical standards, and high yield continued to outperform investment grade. Commodities were a strength, with gold rallying to new highs amid policy uncertainty.

This week, the markets were mixed, with last week’s rotation carrying over. The S&P 500 and Nasdaq posted modest gains, while small-cap, value, and equal-weight benchmarks outperformed, highlighting the ongoing shift in market leadership. Treasury yields fluctuated throughout the week, responding to a combination of falling unemployment, easing inflation, and solid consumer spending. Shorter-maturity Treasury yields rose as expectations for a near-term rate cut diminished, while longer-maturity yields declined. Commodities rallied, led by a sharp rise in oil and gains in gold and copper, and bitcoin rose to the highest level since mid-November.

The past few years have tested the role of bonds and fixed income in portfolios. Today, the combination of lower interest rate volatility and higher starting yields points toward a more familiar risk and return profile. Bonds could still experience volatility if inflation or policy expectations shift again, but they’re behaving more like an asset class that can provide a blend of diversification and income

This week, the markets started 2026 on a positive note, with major equity indices extending their 2025 gains as leadership shifted to smaller companies and cyclical sectors. Economic data reinforced the picture of a two-speed economy, with divergent activity across goods and services alongside softer labor conditions. The dominant market narrative centers on a soft landing, where the economy slows but avoids a recession, and the growth potential of the AI industry. Looking ahead, the main questions are whether stock market leadership will continue to broaden and how much further the Fed will cut interest rates.

Markets navigated a complex environment in Q4. The quarter began with a 43-day government shutdown, which delayed key economic data releases. The lack of timely information made it difficult to assess the economy’s strength and contributed to volatility as the market reacted to incomplete data. The Fed cut rates by 0.50% but signaled a pause, suggesting it could cut less than the market expects in 2026. Against this backdrop, the S&P 500, Nasdaq, and small-cap stocks each set new highs. In this post, we recap the defining themes and events of Q4, review performance across key markets, and look ahead to 2026.

This week, markets ended the week in a more measured and selective mood as investors digested signs of a cooling economy. Equity markets were choppy, with weakness concentrated in technology and AIrelated stocks rather than broad weakness. The S&P 500 fell nearly 2%, while the Nasdaq and Russell 2000 declined by nearly 3%. Bonds ended the week modestly higher as Treasury yields drifted lower, though longer-maturity bonds underperformed. The VIX market volatility index rose as technology stocks weighed on the broad index, and oil prices declined nearly -3%.

This week, markets leaned risk-on as the Fed delivered its third consecutive rate cut and investors doubled down on the soft-landing narrative. Stocks wavered early but rallied after Wednesday’s Fed decision, with the S&P 500 and Dow moving back toward all-time highs.  The Nasdaq and large-cap growth stocks finished the week mostly unchanged, and defensive sectors lagged. In the credit market, bonds ended the week with modest losses as Treasury yields edged higher amid expectations that the Fed will pause its rate-cutting cycle. Oil held near a four-year low, reinforcing the disinflationary tailwind, while gold hovered near record levels and Bitcoin remained volatile.

The S&P 500 has delivered strong returns the past two years, setting 57 all-time highs in 2024 and adding more than 35 in 2025. Large-cap stocks have benefited from a combination of AI enthusiasm, resilient earnings, and strong economic growth. However, one corner of the market has been noticeably absent: small-cap stocks. While the S&P 500 climbed to new highs, this month’s chart shows the Russell 2000, an index of small-cap stocks, remained stuck below its November 2021 peak. The four-year drought ended this fall when small caps broke through to new highs, driven by expectations for additional Federal Reserve rate cuts.