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US Stocks Hold at Record Highs as Bond Yields Fall
Posted
January 7, 2026
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2,569
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40
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January 7, 2026
2,569
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5:04Now PlayingCameron Dawson, Chief Investment Officer at NewEdge Wealth, discusses why policy optimism and cyclical trades may mask a deeper economic slowdown.
Wall Street was cautiously optimistic, sending US stocks back to all-time highs as traders digested mixed economic data and took stock of shifting geopolitical risks. Yields fell across the globe.
The S&P 500 Index inched higher to notch its second intraday record of 2026 on Wednesday. The Nasdaq 100 climbed 0.6%. Valero Energy Corp. climbed to an all-time high, leading shares of refiners higher after President Donald Trump said Venezuela would turn over millions of barrels oil to the US.
The rally in US Treasuries was dampened after US services activity expanded in December at the fastest pace in more than a year, fueled by solid demand growth and a pickup in hiring. Earlier data from ADP Research was better received by the bond market after it showed hiring in December rose at a moderate pace, pointing to sluggish momentum heading into 2026. The yield on 10-year notes fell to 4.14%, with rates also moving lower across most of Europe.
Altogether, the economic data was positive according to Vital Knowledge’s Adam Crisafulli, though drops in both an equal-weighted version of the S&P 500, which gives Dollar Tree Inc. as much clout as Apple Inc., as well as a gauge of smaller firms bear watching.
“The underlying price action is poor,” Crisafulli noted. Traders are now awaiting Friday’s key December nonfarm payrolls report to recalculate wagers on the depth and speed of the Federal Reserve’s interest rate cuts in 2026.
Stocks have been on a tear on optimism over solid earnings growth and inflation remaining sufficiently contained for the Fed to keep cutting borrowing costs. That optimism has persisted despite a worsening geopolitical backdrop, including US actions in Venezuela, its threats of intervention elsewhere and rising tensions between China and Japan.
“Shifting trends create uncertainties that need to be priced into assets,” said Florian Ielpo, head of macro and multi-asset at Lombard Odier. “We are talking about a breathing period, with investors taking time to rethink how to deploy their concentrated equity investments in a deconcentrating world.”
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