The Profit Margin: January 12, 2026
Statistic of the Week
With new car prices reaching record highs, in 2026, the U.S. is expected to see a decline in new vehicle sales for the first time since 2022. The cost of the average new car now equals roughly 36 weeks of pay. Since 2019, Americans earning $150,000 or more have increased their new car purchases by 45%, while those earning less than $75,000 have reduced new car purchases by 30%.
Global Perspective
Despite internal divisions, the European Union approved a formal free-trade agreement with four South American countries, creating a trading bloc that connects more than 700 million people. The agreement between the EU and the Mercosur nations—Brazil, Argentina, Paraguay, and Uruguay—had been under negotiation for more than two decades and ultimately hinged on provisions for agricultural support for European farmers.
Market Moving Events
Tuesday: CPI, New Home Sales
Wednesday: Retail Sales, PPI, Existing Home Sales, Beige Book
Thursday: Jobless Claims, Empire State Manufacturing, Import Prices
Friday: Industrial Production, Capacity Utilization
Commentary
Despite a volatile week marked by political and geopolitical developments, both the S&P 500 and the Dow Jones Industrial Average closed at record highs, rising 1.57% and 2.32%, respectively.1 While falling just short of a new record, the Nasdaq advanced 1.88% and has finished higher in five of the past seven weeks.2 Volatility was especially high in defense and energy stocks. Equity market participation also appears to be broadening, with both mid-cap and small-cap stocks rallying strongly during the week and reaching fresh highs.3 Fixed income yields were essentially unchanged on both a weekly and year-to-date basis. The 10-year Treasury yield ended Friday at 4.17%.4
The December employment report was notable for several reasons. First, the economy added fewer jobs in December than forecast (chart below). During the fourth quarter, job growth averaged a modest 29,000 per month, and the labor force participation rate declined to 62.4%.5 Despite this softness, the unemployment rate—expected to either hold steady or increase—fell to 4.4%.6 Average hourly earnings rose 0.3% for the month, in line with estimates, while the year-over-year increase of 3.8% came in higher than expected.7 Overall, the report presented a mixed picture and is unlikely to materially alter the Federal Reserve’s projected policy path.
This week, major banks will kick off earnings season. Markets will also receive the closely watched CPI and PPI inflation reports. Analysts expect both headline and core CPI inflation to hold steady at 2.7%.8 Any surprises could trigger an uptick in market volatility.
Chart of the Week
The U.S. economy added 50,000 jobs in December, falling short of analyst expectations. In 2025, job growth averaged 49,000 per month—well below the 168,000 monthly average recorded in 2024.
Source Materials
Market Moving Events:
MarketWatch.com
Chart of the Week:
Clearnomics,
Bureau of Labor Statistics
Statistic of the Week:
Money
Global Perspective:
The New York Times
Commentary:
1. Bloomberg
2. Bloomberg
3. MarketWatch.com
4. MarketWatch.com
5. Bureau of Labor Statistics, Investors’ Business Daily
6. Bureau of Labor Statistics
7. CNBC.com
8. MarketWatch.com