Markets enter 2026's first full trading week with an extraordinary convergence of events including the Consumer Electronics Show (CES) in Las Vegas where Nvidia (NVDA) CEO Jensen Huang and AMD (AMD) CEO Lisa Su will deliver keynote speeches that could significantly influence AI infrastructure investment narratives following recent sector volatility. The week features a comprehensive economic data calendar building to Friday's December jobs report at 8:30am, which will provide the final employment snapshot of 2025 and potentially influence Federal Reserve policy expectations after the central bank's more hawkish December meeting. Monday's ISM Manufacturing data kicks off the week with insights into industrial sector health and pricing pressures, while Wednesday delivers an intensive convergence of ADP employment, ISM Non-Manufacturing data, and JOLTS job openings that together will paint a complete picture of labor market and business activity conditions. The absence of major earnings allows economic data and CES technology announcements to dominate market attention as institutional participants return from holiday breaks and establish 2026 positioning. The week will test whether markets can sustain momentum from any year-end Santa Claus Rally or if concerns about Fed policy, inflation persistence, and AI spending sustainability will pressure stocks early in the new year.
Here are 5 things to watch this week in the Market.
CES 2026: AI Hardware Innovation Showcase
The Consumer Electronics Show in Las Vegas brings heightened focus to semiconductor leaders as Nvidia (NVDA) CEO Jensen Huang and AMD (AMD) CEO Lisa Su deliver keynote speeches that could determine AI infrastructure sector sentiment heading into 2026. Huang's presentation will be scrutinized for announcements about next-generation AI accelerators beyond the Blackwell architecture, data center roadmaps, and any commentary about customer demand sustainability following recent concerns about return on AI capital expenditures. New product reveals, partnership announcements, or updated AI performance metrics could either reinforce Nvidia's technology leadership or raise questions about competitive threats from custom chips developed by hyperscalers. AMD's Lisa Su faces pressure to demonstrate credible AI accelerator momentum with MI300 series adoption and competitive positioning against Nvidia's dominance in data center GPUs. Any major wins with cloud service providers or enterprise customers could boost AMD's credibility in AI infrastructure markets. Both keynotes will be watched for commentary about AI application evolution, edge computing developments, and the sustainability of current investment cycles. The CES announcements come at a critical juncture following Oracle and Broadcom's disappointing earnings that triggered sharp selloffs in AI-related stocks, making this week's messaging particularly important for sector stabilization.
December Jobs Report: Year-End Employment Reality
Friday's December employment report at 8:30am represents the final labor market assessment of 2025 and will significantly influence Federal Reserve policy expectations after the central bank's more cautious 2026 outlook delivered at December's meeting. Nonfarm payrolls, unemployment rate, and average hourly earnings will be analyzed for evidence of labor market resilience or deterioration that could determine the timing and magnitude of future Fed rate adjustments. The report comes after November's mixed employment data showed moderate job gains but rising unemployment, creating uncertainty about labor market trajectory. Wednesday's ADP employment report at 8:15am will provide a private sector preview, while JOLTS job openings at 10:00am will offer perspective on labor demand and hiring intentions. Thursday's initial jobless claims will round out the employment picture ahead of Friday's comprehensive data. Strong employment numbers could reinforce the Fed's hawkish pivot and reduce expectations for aggressive 2026 rate cuts, while significant weakness could revive concerns about economic momentum and support more dovish positioning. The wage growth component will be particularly important for inflation expectations, as persistent wage pressures could complicate the Fed's ability to declare victory over inflation.
Manufacturing and Services Sector Assessment
Monday's ISM Manufacturing PMI at 10:00am provides the first major economic data of 2026, offering insights into industrial sector conditions, new orders, employment trends, and pricing pressures that set the tone for the week ahead. The ISM Manufacturing Prices component will be closely watched for evidence of inflationary pressures at the business level, particularly relevant given the Fed's concerns about persistent inflation. Tuesday's Services PMI at 9:45am will provide an initial perspective on the economy's largest sector, while Wednesday's ISM Non-Manufacturing PMI at 10:00am will offer comprehensive insights into services sector activity including business sentiment, employment conditions, and pricing power. The ISM Non-Manufacturing Prices component will provide additional inflation context ahead of Friday's employment report. The convergence of manufacturing and services data will help determine whether the economy entered 2026 with strengthening or weakening momentum. Strong readings could validate the Fed's more cautious policy stance by suggesting economic resilience that reduces urgency for aggressive accommodation, while disappointing results could raise questions about soft landing sustainability and revive concerns about potential recession risks.
Early 2026 Positioning and Sector Rotation
The first full trading week of 2026 represents a critical period for establishing portfolio positioning as institutional participants return from holiday breaks and implement new year strategies. The year begins with significant uncertainty around multiple themes including AI infrastructure spending sustainability after recent earnings disappointments, Federal Reserve policy trajectory following the hawkish December meeting shift, inflation persistence despite recent progress, and labor market resilience amid mixed employment signals. Technology stocks, particularly AI-related names, face pressure to demonstrate that massive capital expenditures can translate into revenue growth and profitability rather than just building excess capacity. The sector rotation dynamics established during this week could influence market leadership throughout the first quarter, with defensive sectors potentially benefiting if economic data disappoints or growth stocks maintaining leadership if AI narratives stabilize and economic resilience continues. January's historical tendency toward strength—the so-called "January Effect"—will be tested against headwinds from Fed policy uncertainty and valuation concerns in market-leading sectors.
Inflation Signals and Fed Policy Implications
The week's comprehensive economic data calendar provides multiple perspectives on inflationary pressures through the ISM prices components Monday and Wednesday, wage growth data Friday, and business activity indicators throughout the week. The Fed's December meeting emphasized that inflation progress has slowed and policymakers need to see sustained evidence of disinflation before committing to continued accommodation, making this week's inflation signals particularly important for rate cut expectations. The ISM Manufacturing and Non-Manufacturing Prices indexes will offer insights into whether businesses are experiencing moderating or accelerating input cost pressures. Friday's average hourly earnings data will be crucial for assessing whether wage inflation remains elevated in ways that could perpetuate services sector price pressures. The combination of business-level pricing indicators and labor cost data will help markets assess whether the Fed's more cautious stance is justified or if inflation is indeed cooling sufficiently to allow continued policy easing. Any evidence of reaccelerating price pressures could pressure rate-sensitive sectors and support the dollar, while benign inflation readings could provide relief and support risk assets heading into earnings season.
Best of luck this week and don't forget to check out my daily options article.
On the date of publication, Gavin McMaster had a position in: NVDA . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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