Nasdaq Gains 100+ Points as US Consumer Sentiment Improves in January 2026

This analysis is based on the Benzinga report published on January 23, 2026 [1], which reported that U.S. stocks traded mixed midway through trading, with the Nasdaq Composite gaining more than 100 points as U.S. consumer sentiment rose in January. The trading session demonstrated pronounced sector rotation, with technology and communication services stocks advancing while financial services and healthcare sectors faced significant pressure.

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The January 23, 2026 trading session revealed a stark divergence between technology-sensitive indices and those weighted toward financial and industrial stocks. The Nasdaq Composite closed at 23,544.13, gaining 107 points or +0.46%, driven primarily by strength in semiconductor and software companies [0]. The S&P 500 recorded a more modest gain of 7.50 points (+0.11%) to close at 6,921.21, reflecting the mixed nature of market breadth [0].

In contrast, the Dow Jones Industrial Average declined by 242 points (-0.49%) to close at 49,143.17, with the index weighed down by financial sector weakness and several components reporting disappointing earnings or outlooks [0]. The Russell 2000 small-cap index underperformed significantly, declining -1.51% to 2,671.80, suggesting that market participants were favoring large-cap quality names over smaller, domestically focused companies [0].

The technology-focused QQQ trust gained +0.55% with trading volume of 28.51 million shares, continuing its pattern of outperformance relative to the broader market [0]. This divergence between technology indices and the Dow Jones reflects the sector rotation dynamics that characterized the session, as investors shifted away from rate-sensitive financial and industrial stocks toward growth-oriented technology names.

The University of Michigan Consumer Sentiment Index reached 56.4 in its final January 2026 reading, representing a meaningful improvement from the preliminary estimate of 54.0 and the December 2025 reading of 52.9 [1][2]. This beat of economist expectations, which had generally projected a reading around 54.0, provided a constructive backdrop for risk assets and contributed to the afternoon rally in technology stocks [2].

However, analysts caution that while the month-over-month improvement is encouraging, the index remains more than 20% below levels recorded at this time last year, indicating that consumer confidence has significant ground to recover before returning to historical norms [2]. The improvement was broadly distributed across income, age, and education demographic groups, suggesting a genuine improvement in consumer outlook rather than a narrow phenomenon affecting only specific populations [2].

Inflation expectations showed signs of easing, with the 1-year inflation outlook declining to 4.0% and the 5-year expectation moderating to 3.3% [2]. This easing in inflation expectations could provide the Federal Reserve with additional flexibility in its policy stance, though the trajectory of interest rates remains subject to incoming economic data and evolving trade policy developments.

The sector performance data reveals the extent of rotation occurring in the market. Communication Services (+1.02%), Basic Materials (+0.91%), and Technology (+0.88%) led gains, while Financial Services (-1.45%) and Healthcare (-0.81%) lagged significantly [0]. This sector rotation pattern reflects several concurrent dynamics affecting market sentiment.

The Technology sector’s strength was supported by developments in the artificial intelligence and semiconductor space. Reports indicate continued collaboration between Intel and NVIDIA on custom Xeon processors with NVLink integration for AI host nodes, underscoring the ongoing investment in AI infrastructure [3]. Additionally, NVIDIA’s reported discontinuation of its Open Price Program (OPP) that helped maintain gaming GPU prices near MSRP suggests continued strong demand and pricing power in AI-related semiconductor markets, potentially leading to 40-50% price increases for certain graphics cards as production prioritizes AI data center applications [3][5].

The Financial Services sector’s weakness appeared connected to significant headline risk involving JPMorgan Chase, which faces a $5 billion lawsuit filed by President Trump alleging the bank “debanked” his accounts for political reasons [4]. The lawsuit, filed on January 22, 2026, alleges that CEO Jamie Dimon personally approved putting Trump on a “blacklist,” which allegedly caused other banks to avoid doing business with him [4]. JPMorgan has stated the lawsuit “has no merit” and that the bank “does not close accounts for political or religious reasons” [4]. This legal uncertainty contributed to sector-wide weakness and weighed heavily on the Dow Jones Industrial Average, which includes JPMorgan as a component.

The S&P Global PMI readings for January 2026 indicate continued modest economic expansion, with the Services PMI at 52.5 (unchanged from December), the Composite PMI at 52.8 (+0.1), and the Manufacturing PMI at 51.9 (+0.1) [1]. All three indices remain above the 50.0 growth threshold, suggesting the U.S. economy continues to expand at a moderate pace. The composite reading of approximately 52.8 is consistent with annualized GDP growth in the 2-3% range, indicating moderate-but-not-accelerating economic growth [1].

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: The market’s dependence on technology sector strength creates vulnerability if AI or technology sentiment shifts. The Nasdaq’s 100+ point gain, while positive, reflects a narrow leadership base. Investors should be aware that continued index-level gains without broadening participation across sectors may indicate elevated concentration risk.

: Despite improved sentiment readings, the disconnect between improved confidence and actual consumer behavior warrants monitoring. While the University of Michigan data shows improving mood, retail sales data for January remains unavailable, and survey evidence suggests consumers are practicing “selective spending” even as confidence improves [2].

: The JPMorgan lawsuit represents an unprecedented legal action against a major financial institution, introducing material legal and operational uncertainty. While JPMorgan has substantial resources to defend itself, prolonged litigation could impact strategic planning, reputation, and potentially set precedents for bank-customer relationship frameworks [4].

: Reports suggest inflation could rise to 2.7% in 2026 as tariff costs pass through to consumers, particularly in categories like apparel (+8.99 percentage points) [6]. This potential upside risk to inflation could force a recalibration of Federal Reserve policy expectations and create headwinds for interest-rate-sensitive sectors.

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1. Legal and Regulatory Uncertainty
   : The JPMorgan lawsuit introduces significant uncertainty for financial institutions. The legal outcome could have implications for bank-customer relationships and regulatory frameworks [4]. The Financial Services sector’s -1.45% decline reflects market concern about potential ripple effects across the industry.

2. Consumer Fragility
   : Despite improved sentiment, consumer confidence remains significantly depressed year-over-year. Any deterioration in the labor market could rapidly reverse recent gains, making upcoming employment data critical monitors [2].

3. Inflation Trajectory
   : While current inflation expectations are easing, potential tariff-driven price increases present an upside risk that could force recalibration of Federal Reserve policy expectations and impact market sentiment toward rate-sensitive sectors [6].

4. Sector Concentration Risk
   : The market’s dependence on technology sector strength creates vulnerability if AI or technology sentiment shifts. The Nasdaq’s gains reflect a narrow leadership base that may not be sustainable under adverse conditions.

1. Technology Sector Momentum
   : Continued AI infrastructure investment and semiconductor demand provide constructive tailwinds for technology sector exposure. NVIDIA’s pricing power and Intel collaboration developments highlight ongoing growth opportunities in the AI value chain [3][5].

2. Consumer Recovery Potential
   : If labor market conditions remain resilient, continued improvement in consumer sentiment could translate into stronger retail spending, potentially benefiting consumer discretionary and communication services sectors.

3. Easing Inflation Expectations
   : Moderating inflation expectations could support a more accommodative Federal Reserve stance, providing a favorable backdrop for growth-oriented investments and longer-duration assets.

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• Nasdaq Composite: 23,544.13 (+107.00, +0.46%)
• S&P 500: 6,921.21 (+7.50, +0.11%)
• Dow Jones Industrial: 49,143.17 (-242.00, -0.49%)
• Russell 2000: 2,671.80 (-41.00, -1.51%)

• University of Michigan Consumer Sentiment Index: 56.4 (final January reading)
• 1-year inflation expectations: 4.0%
• 5-year inflation expectations: 3.3%
• Index remains 20%+ below year-ago levels

• Communication Services: +1.02%
• Basic Materials: +0.91%
• Technology: +0.88%

• Financial Services: -1.45%
• Healthcare: -0.81%
• Utilities: -0.50%

• JPMorgan faces $5 billion lawsuit from Trump administration [4]
• NVIDIA discontinues OPP program, potentially impacting GPU pricing [3][5]
• Intel-NVIDIA collaboration on custom Xeon processors with NVLink integration [3]

• Upcoming labor market data (weekly jobless claims, nonfarm payrolls)
• January retail sales figures
• Federal Reserve commentary on economic outlook
• Developments in the JPMorgan lawsuit
• Technology sector earnings and AI demand trends
• University of Michigan consumer confidence revisions

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The January 23, 2026 trading session demonstrated continued market divergence between technology-sensitive indices and rate-sensitive or financial-heavy indices. The Nasdaq’s gain of over 100 points reflected investor confidence in the technology sector’s growth prospects and the AI investment theme, while the Dow’s decline was heavily influenced by financial sector weakness tied to headline risk [1][0].

The improvement in consumer sentiment to 56.4 represents a positive data point, though the index’s significant year-over-year decline underscores that consumer confidence remains in structurally weak territory [2]. The combination of easing inflation expectations and modest economic growth, as indicated by PMI data, presents a constructive backdrop for risk assets, provided that the labor market remains resilient and no major shocks emerge [1][2].

Market participants should focus on validating sentiment improvement through actual consumer spending data, monitoring labor market indicators for consumer confidence sustainability, tracking legal and regulatory developments affecting the financial sector, and staying attuned to technology sector earnings and AI demand trends.