Markets were mixed last week, but the real story to start 2026 requires a deeper inspection of a key emerging trend. Although at the broad index level, markets appear to be doing reasonably well, under the surface, the movements seem a bit more precarious. The biggest news recently has been the bloodbath in software stocks, as AI’s continued evolution threatens the once-perceived moats of many software companies. ​

​Markets have started the new year on a strong note, led by small-cap stocks. It is still very early, but the recent performance, first of international equities, and now small caps, is an encouraging sign. A much-anticipated broadening of returns, away from the usual leadership, is a positive development for stock markets and is something investors should be watching.

​Stock markets came roaring back last week, enough to eke out a small gain for November. The bubble fears seem to be abating, while there seems to be an increasing likelihood of another Fed rate cut this month. The ongoing sluggishness in labor data has investors and some Fed officials feeling as though another rate cut is needed.

​There is no shortage of topics we could write about; however, the biggest news might be the lack of volatility over the last few months, as markets enjoyed fairly uninterrupted growth. It often feels like the volume is turned all the way up on any number of issues, but markets sometimes can tune out the noise and take things at face value. Of course, this does not mean that risks are absent or that everything happening in markets is good, but when you have a quarter like the one that just passed, it is worth taking some time to appreciate the calm.