Daily market snapshot

• Markets rise higher on strong productivity growth – The TSX and U.S. equity markets finished higher on Thursday, as a broad range of sectors – led by energy and consumer staples – offset a pullback in technology stocks*. Bond yields rose, with the 10-year Government of Canada yield at 3.40% and the 10-year U.S. Treasury yield at 4.18%*. Internationally, Asia finished lower amid rising geopolitical tensions*. The U.S. dollar strengthened against major currencies*. In commodities, WTI oil rebounded after its pullback in recent days*.
• Jobless claims rise modestly – S. initial jobless claims increased to 208,000 this past week — in line with expectations — from 200,000 the prior week*. Continuing claims, which measure the total number of people receiving benefits, edged higher to 1.91 million, slightly above forecasts for a smaller rise to 1.87 million*. The unemployment rate has risen in recent months to 4.6%, and job openings contracted in November to 7.1 million, slightly below unemployment of 7.8 million*. Tomorrow's employment report for December will help provide a deeper look at the labour market, with forecasts calling for 55,000 jobs added and the unemployment rate to tick down to 4.5%*. We expect the current low-hiring, low-firing environment to persist, supporting gradual inflation moderation — though likely at a slower pace.
• Strong productivity gains drive unit labor costs lower –S. nonfarm business sector productivity rose 4.9% annualized for the third quarter of 2025, ahead of estimates of 4.6% and marking the strongest reading in two years*. Hourly compensation grew 2.9% year-over-year – slightly above CPI inflation of about 2.7%* – resulting in continued positive real wage gains, on average. Growing disposable income should help support consumer spending and the broader economy, in our view. Unit labour costs, which reflect wage gains adjusted for changes in productivity, fell 1.9% annualized, below expectations for a 0.2% gain*. Lower unit labour costs should help ease inflation pressures, in our view.

Brian Therien, CFA;
Investment Strategy

^{Source: *FactSet}

• Stocks end mixed after fresh highs – Markets diverged today, as the Nasdaq advanced while the TSX and Dow slipped after touching record highs, amid ongoing geopolitical headlines and ahead of key U.S. labour data*. Bonds rallied, sending yields lower, following weaker-than-expected German retail sales, moderating eurozone inflation, and a decline in total U.S. job openings*. Oil prices fell after President Trump indicated Venezuela will ship 30–50 million barrels of sanctioned oil to the U.S., as Washington seeks greater control over the country’s industry*. Also making headlines, Trump threatened to pause capital returns for defense contractors and proposed a ban on single-home purchases by institutional investors, pressuring shares of defense companies and some asset managers. On the corporate front, Warner Bros. Discovery rejected Paramount’s latest bid, calling it inferior to its existing deal with Netflix. Meanwhile, precious metals paused after a strong 2025 and a solid start to the year, with both gold and silver declining today*.
• Small-caps and value lead early-year gains - Just a few days into the new year, markets are already digesting major geopolitical headlines while bracing for a wave of economic data ahead. Despite the headline volatility, equities have largely shrugged off the news, with major indexes hitting fresh highs yesterday*. While recent developments carry significant geopolitical implications, they do not materially alter the near-term outlook for the economy or oil supply, in our view, the factors markets truly care about. Meanwhile, a pro-cyclical rally is underway, with small-cap stocks outperforming large-caps and value-style investments outpacing growth*. We believe this reflects supportive fundamentals, including an expected broadening of earnings momentum both within and beyond U.S. mega-cap tech.
• Labour-market data in focus – U.S. private payrolls, as reported by ADP this morning, rose by 41,000 in December, roughly in line with consensus expectations*. This moderate pace suggests a labour market that may be stabilizing after a soft patch over the past six months. Most job gains came from familiar sectors such as education and health services*. Encouragingly, for the first time in four months, firms with fewer than 50 employees added jobs*. This data precedes Friday’s December employment report, which will likely be closely watched for its implications on Fed policy. Last month’s report showed unemployment rising to 4.6%, a four-year high, but largely for constructive reasons as more workers re-entered the labor force*. We believe the current low-hiring, low-firing environment will persist. However, with economic activity remaining solid, hiring could pick up slightly. We expect monthly U.S. job gains to firm modestly into the 50,000–100,000 range, while a smaller labour supply—partly due to lower immigration—keeps unemployment near 4.5% in 2026. In Canada, we think we may be past the peak in unemployment, as we expect private hiring to pick up, (hopefully) helped by an easing in trade-policy uncertainty and an accompanied improvement in Canadian growth.

Angelo Kourkafas, CFA;
Investment Strategy

^{Source: *Bloomberg} 

• Stocks close higher – North American equity markets finished higher on Tuesday with the S&P 500 and TSX each gaining 0.6%.* Leadership was broad-based, with cyclical sectors of the S&P 500 such as materials and industrials outperforming alongside the defensive health care sector.* Additionally, economic-growth-sensitive U.S. small-cap stocks saw strong returns as well, with the Russell 2000 Index gaining more than 1%.* Overseas, Asian markets were mostly higher overnight, while European markets traded higher as well.* Bond yields closed modestly higher, with the 10-year U.S. Treasury yield finishing at 4.17% while the 10-year GoC yield closed at 3.44%.* In commodity markets, oil finished lower, reversing gains at the open, while precious metals such as gold and silver each finished the day higher as investors continue to digest recent geopolitical developments between the U.S. and Venezuela.*
• Labour-market data in focus – Investors will have a wave of key labour-market data to digest this week, beginning tomorrow with the release of the December ADP U.S. employment report and the November JOLTS job openings data. Friday will bring the U.S. unemployment rate and nonfarm-payrolls report for December, with expectations calling for the unemployment rate to tick down to 4.5% and nonfarm payrolls to increase by 60,000.* Friday will also provide a read on trends in the domestic labour market, with the December labour-force survey expected to show a 5,000 contraction in employment while the unemployment rate is expected to rise to 6.7%.* 2025 was a year of cooling labour-market conditions, with U.S. nonfarm-payroll growth averaging about 55,000 over the first 11 months, down from an average of 168,000 in 2024.* In Canada, despite strong employment growth in the last three months, employment growth has averaged a modest 20,000 per month in 2025, down from 49,000 in 2024.* However, despite slowing job growth, there have been limited signs of layoffs.* The unemployment rates in the U.S. and Canada remain contained from a historical perspective and U.S. weekly initial jobless claims averaged just 226,000 in 2025—well below the 30-year average of 364,000.* While labour-market conditions have cooled in the U.S. and Canada, we expect conditions to stabilize in 2026, perhaps supporting steady economic growth.
• U.S. stocks in rare territory after third year of over 10% gains – The S&P 500 gained 16.4% in price terms in 2025, marking the third consecutive year in which the index has returned more than 10%.** Since 1950, there have been only four other periods—1950–1952, 1995–1999, 2012–2014, and 2019–2021—during which the index posted double‑digit gains for three consecutive years.** Historically, returns in the fourth year have been modest, with the S&P 500 delivering an average gain of just 1.5%.** Despite the fourth year following three consecutive years of strong gains having historically produced lackluster returns, we see reasons for optimism in 2026. Notably, S&P 500 earnings are expected to grow by nearly 15%*, which, if realized, could help support solid equity performance even if valuations remain unchanged. We expect steady U.S. economic growth in 2026, underpinned by easing monetary policy and modestly stimulative fiscal policy, factors that we think should also help pave the way for continued corporate profit growth. We would, however, emphasize that diversification across regions and sectors will likely be key to investor success in 2026, particularly with the S&P 500 heavily concentrated within the 10 largest companies. Against this backdrop, we recommend investors take a globally diversified approach to overweighting equities relative to bonds. To view our full suite of portfolio guidance, check out our Monthly Portfolio Brief.  

Brock Weimer, CFA;
Investment Strategy

^{Source: *FactSet **Morningstar Direct, Edward Jones.}

• The U.S. captures Venezuelan leaders: What are the implications – Over the weekend, the U.S. military executed a mission to capture Venezuelan leader Nicolas Maduro and his wife Cilia Flores. They were flown to New York and charged with narco-terrorism conspiracy and other crimes. Perhaps most notably, the U.S. administration has indicated that the U.S. would now run Venezuela until a safe and judicious transition of power takes place. In addition, the U.S. is planning to rebuild the oil infrastructure in Venezuela, with support from major U.S. energy companies.
  
  What are the implications of these actions? From a macroeconomic perspective, we know Venezuela is a relatively small player. Its economy is less than 1% of global GDP, and it represents less than 1% of U.S. and global trade. The country does have about 17% of global oil reserves, but due to failing infrastructure, they deliver just about 1% of global production. Thus, assuming these tensions remain contained, there is likely limited systemic risk to the broader global economy.
  
  However, perhaps the broader implication to monitor is the precedent this action may set globally, especially given that the U.S. plans to retain power in Venezuela until a transition of government occurs. It is early days still, but this will be a longer tail risk to watch, particularly as economies like China and Russia strategize their own next steps.
• Market reactions to the Venezuelan actions were muted – As expected, the market reactions to the geopolitical actions in Venezuela were largely contained. Stock markets in the U.S. closed solidly higher, with the Dow Jones leading the S&P 500 and Canadian TSX. There was also a rise in safe-haven assets, with U.S. Treasury bonds and gold higher on Monday as well. On the commodity front, we are seeing some upward pressure on oil prices, with WTI crude oil up about 1.8% to around $58.30. However, keep in mind that oil prices started near multi-year lows as oil markets globally continue to face oversupply. Notably, large U.S. oil companies did rise as well, with companies like Chevron, Marathon, and Valero Energy all up 5% - 10% on Monday.
• U.S. economic and labor market data in focus this week as well – This week also brings a full slate of economic releases that will offer an updated read on both overall activity and labor‑market conditions. Key reports include U.S. ADP private payrolls, ISM Services, JOLTS job openings, and factory orders on Wednesday; initial jobless claims and productivity/unit labor costs on Thursday; and the December jobs report for the U.S. and Canada on Friday*. Recent jobs data has shown mixed signals, with U.S. unemployment rising to 4.6%, a four‑year high, but largely for the "right" reasons as more workers re‑entered the labor force*. Friday's report is expected to indicate about 60,000 jobs added, in-line with recent trends of sub-100,000 job growth, and the unemployment rate to tick lower, from 4.6% to 4.5%. Overall, we continue to see a U.S. labor market characterized by a continued low‑hiring, low‑firing environment. We expect monthly job gains to firm modestly into the 50,000–100,000 range, while a smaller labor supply—partly reflecting lower immigration—keeps unemployment near 4.5% in 2026.

Mona Mahajan;
Investment Strategy

^{Sources: *Bloomberg}

• Stocks kick off 2026 mostly higher - Global equities rose on the first trading day of the year, supported by renewed enthusiasm around AI in China, pro‑cyclical leadership from U.S. small- and mid-cap stocks, and energy-sector gains in Canada*. Asian markets set an upbeat tone overnight after DeepSeek published a paper outlining a more efficient approach to AI development, while shares of China’s Baidu advanced on reports that it is preparing to list its AI chip unit in an IPO*. Major indexes in Hong Kong, Korea, Taiwan, and Singapore all recorded fresh highs*. In the U.S., however, semiconductor gains were not enough to keep the Nasdaq in positive territory for the day. There were no major new economic data releases or corporate headlines. As previously announced, Berkshire Hathaway officially named Greg Abel as its new CEO, succeeding Warren Buffett. Meanwhile, silver extended its strong momentum after a standout year that saw precious metals reach new highs*, while oil prices declined following their steepest annual drop since 2020*.
• Optimism remains after a strong year - 2025 proved volatile but ultimately rewarding for investors, with global equity markets delivering robust gains. The TSX gained over 30% including dividends while the S&P 500 logged 39 new all‑time highs and returned 18%*. Looking ahead to 2026, we anticipate another year of positive returns supported by steady economic growth, modest fiscal stimulus, expected additional Fed easing, and rising corporate earnings. However, as we enter the fourth year of this bull market, investors should also remain mindful of potential risks, such as intermittent AI‑related setbacks and persistent inflation pressures. Following several years of double‑digit gains that have pushed valuations higher, 2026 will likely hinge on earnings growth doing more of the heavy lifting. While returns may moderate, we expect the bull market to continue. AI should remain a key driver, but we also anticipate broader market participation—both within tech and across other sectors and regions—supporting the case for a balanced and diversified portfolio approach.
• Busy week of data ahead - Next week brings a full slate of economic releases that will offer an updated read on both overall activity and labour‑market conditions. Key reports include U.S. ISM Manufacturing on Monday; Canada PMI on Tuesday; U.S. ADP private payrolls, ISM Services, JOLTS job openings, and factory orders on Wednesday; U.S. initial jobless claims and productivity/unit labor costs on Thursday; and the Canada and U.S. employment reports on Friday*. Recent jobs data has shown mixed signals, with U.S. unemployment rising to 4.6%, a four‑year high, while Canada's unemployment rate dipped to 6.5%*. Looking ahead, we see the most likely path as gradual stabilization, characterized by a continued low‑hiring, low‑firing environment. We expect monthly U.S. job gains to firm modestly into the 50,000–100,000 range, while a smaller labor supply—partly reflecting lower immigration—keeps unemployment near 4.5% in 2026. In Canada, we think we may be past the peak in unemployment as we expect private hiring to pick up, (hopefully) helped by an easing in trade policy uncertainty, and an accompanied improvement in Canadian growth.  

Angelo Kourkafas, CFA;
Investment Strategy

^{Sources: *Bloomberg}