Markets struggled to move higher on the week on a mixed AI outlook and a hotter than expected PPI report which more than offset the latest batch of strong economic data. The Federal Reserve also did little to sway investor sentiment, announcing in a widely expected move it would hold rates steady. Friday’s session brought January trading to a close. Although the major indices finished the month higher, market volatility looks likely to remain elevated heading into February as investors digest the AI outlook and a partial federal government shutdown which remains on track for Saturday.
Week’s Key Items:
- The Federal Reserve held its benchmark rate steady this week, continuing to target a range between 3.50% and 3.75%. This marks the first time since July that the central bank has elected to not cut. The Fed also noted it was in no hurry to lower rates, citing solid economic activity and signs of labor market stabilization. Markets for the most part dismissed the Fed announcement and statement, believing that two more rate cuts will happen this year once Trump replaces Fed Chair Jerome Powell in May.
- Producer prices rose more than expected in December. The PPI Index increased 0.50% for the month, higher than November’s 0.20% and estimates for a 0.30% rise. Core PPI, which excludes volatile food and energy, increased even more, up 0.70%. Much of that increase came from a jump in services, while goods prices remained unchanged. On a more positive note, a longer-term pricing view showed continued signs of disinflation as the annual PPI rate closed 2025 higher by 3%, down from 3.50% in 2024.
- After hitting its lowest point since 2009 in October, the U.S. trade deficit soared 94% in November to $56.8 billion. Year-over-year, the deficit through November stood at $839.5 billion, or about 4% higher than the same period in 2024. The increase was driven by an $8.2 billion goods deficit with the European Union despite higher U.S. tariffs on trading partners. The Trump administration has in recent months eased levies – particularly on most European goods – which now stands at 15% as it has sought to stabilize relations with allies.
- Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, rebounded 5.30% in November amid a surge in aircraft demand. Excluding transportation, durable goods orders were higher by 0.50% as strong AI spending helped to more than offset weakness in motor vehicle orders.
Markets Mixed on AI’s Double-Edged Sword
The S&P 500 breached the 7,000 level for the first time ever on Tuesday on strong tech earnings. The record run was sparked by better-than-expected results from processor and memory chipmakers who are feeding the global data and AI infrastructure boom. In a turnaround of sorts, Meta found itself back in investors’ good graces following its earnings release on Thursday. Meta’s heavy AI spending had been questioned by investors for much of 2025, but Meta’s fourth quarter earnings handily beat estimates, and revenue grew 24% year-over-year, driven by AI investments that drove advertising sales. Outside of chipmakers and infrastructure companies themselves, Meta’s results are one of the first examples of Big Tech successfully monetizing what, to this point, had been massive capex hemorrhaging, reminding investors that we are still very early cycle in monetizing these investments. Investors cheered the results, driving Meta up +10% during the session and reinvigorating the AI trade more generally. As happy as investors were with Meta, they were equally disappointed with Microsoft, who shed 10% during the same session. The company reported slowing cloud growth and issued soft guidance on operating margins for the quarter ahead, driving the stock to its worst one-day slide since March 2020. Friday’s trading also brought positive but somewhat mixed results from Apple. Apple managed to beat estimates on strong iPhone demand, but investors soured on the stock due to supply constraints and the company having really no relevant AI offering to speak of. Sorry Siri. Beyond just earnings, AI’s impact on employment, productivity, and inflation is likely to loom large at the Fed as we progress through 2026. On Friday, President Trump announced Kevin Warsh as his Fed Chair pick. Warsh brings a great deal of experience to the job having formerly worked at the Fed during the Financial Crisis as well as being a well-known entity in market circles. He is largely viewed as the “safe” pick who will defend the central bank’s independence, a view which was evidenced by the dollar strengthening and gold (-11%) and silver (-31%) suffering their worst one-day declines since 1980 once the announcement became known.
We close January, on a fundamental basis, just about how we started – strong growth and earnings, good overall prospects, easing inflation, and stabilizing employment. Geopolitical tensions are clearly more elevated now than on Jan. 1 given that Venezuela, Greenland, Cuba, and Iran are all in some state of play. However, geopolitical dust ups have tended to come and go with markets over the last several years, and we see conditions being largely supportive for investors as we enter February, understanding that microbursts from various fronts should entirely be expected.
The Week Ahead
It’s another big week for markets with nonfarm payrolls, services, manufacturing, and Punxsutawney Phil’s 130th weather forecast.
Everything Old is New Again
In our increasingly technology-dominant lives, people are craving a break from endless notifications and the constant stimulation of living in a digital world. As a result, there has been a rise in popularity of hands-on, tech-free, old-fashioned hobbies that are helping people feel more grounded, productive, and connected to others. Hobbies such as sewing, knitting, crocheting, quilting, and needlepoint are seeing a vibrant resurgence. In its U.S. Arts and Crafts Consumer Report 2025, market researcher Mintel revealed that approximately 85 million people completed at least one creative activity in the past year across the U.S. and Canada, and more than 70% of consumers identify as crafters. Over the past five years, there has been a 67% increase in the amount the average craft enthusiast spends per year in supplies, tools, and materials with the amount reaching $3,200 annually.
Younger consumers in their 20s and 30s are a big part of that growth, seeking activities that offer a chance to slow down, be deliberate and purposeful, focus, and decompress from digital overload. They are finding repetitive tasks like knitting to be calming and even meditative, and they are discovering that making something tangible feels more satisfying than passive scrolling on devices. In short, what are often referred to as “grandma hobbies” are providing meaningful alternatives to technology-driven leisure and helping foster calm and presence.
These slow, mindful, handmade pastimes enable crafters to engage in real connections in person — they aren’t just solo pursuits. Craft shops and retailers are increasingly positioning themselves as community spaces, offering in-person craft classes, knitting nights, crochet circles, and other crafting events with opportunities to socialize, form friendships, and share skills.
At Saville Needleworks, a needlepoint business in Dallas that opened a store in 2025, people can stitch at a community table or attend beginner and advanced classes for $20 a session that regularly sell out. The store also holds “Sip and Stitch” events for $10 for up to 12 people.
In its trend predictions for 2026, Pinterest revealed another quiet, slow hobby that will make an unexpected comeback this year: the age-old practice of the handwritten letter. According to the Pinterest Predicts 2026 report, interest in hand-written letters is up 45% while searches for cute stamps have gone up 105% and traffic for pen pal ideas has increased by 90%. The idea that everything old is new again is showing up not only in leisure activities but also in home décor. For 2026, interior designers are predicting lots of antique furniture and vintage touches, including wallpaper, floral patterns, and more, with designers turning to antiques and vintage finds not only for their craftsmanship but also for their ability to instantly lend warmth, character, and individuality to a space. Southern Living magazine in a January 25, 2026 article, This Nostalgic Decorating Essential is Back and Better Than Ever, announced that quilts – a quintessential grandma staple – are making a comeback.
On a cultural level, the rise of these so-called “grandma hobbies” points to a quiet backlash against speed, noise, and constant optimization. There’s comfort in making something slowly, deliberately, and often imperfectly. Many people are finding relief from digital fatigue through these tactile hobbies that offer more balance and tranquility along with something increasingly rare: attention without urgency.