Odds for a "January Effect" in 2026?

Market Overview - The first trading day of 2026 shows positive momentum with the Dow up by 139 points (+0.29%), S&P 500 up by 35 points (+0.51%), Nasdaq up by 235 points (+0.93%), and Russell 2000 up by 13 points (+0.53%) [1] - The Nasdaq experienced a remarkable +39% gain from April tariff lows in 2025, with the Russell 2000, S&P 500, and Dow also showing significant increases of +33%, +32%, and +24% respectively [2] January Effect - The "January Effect" refers to strategies that lead to higher market growth at the start of the year, influenced by tax-loss harvesting, rebalancing initiatives, and reinvestment of year-end bonuses [3] Economic Challenges - Potential headwinds for 2026 include tariffs, employment insecurity, and rising healthcare costs, which may impact U.S. consumer spending [4] - A federal government shutdown is also a possibility as Congress reconvenes [4] Tariff Adjustments - Some tariffs are being rolled back for the new year, including those on furniture and Italian pasta, indicating a recognition of affordability issues both domestically and internationally [5] Upcoming Economic Data - The first full trading week of 2026 will begin with significant economic data releases, including ADP private-sector payrolls and the Employment Situation report, following a weak month for jobs [7] - The final S&P U.S. Manufacturing report for December is expected to remain above the growth threshold at 51.7, although it reflects a decline from the previous month [8][9]