From the desks of Stanley Katz & Lauren Madera
HAPPY NEW YEAR! IN CELEBRATION OF NATIONAL NO LONGER NEW YEAR’S DAY, WE WILL CEASE HEREAFTER FROM WISHING YOU HAPPY NEW YEAR UNTIL JANUARY 1, 2027.
The U.S. stock market has experienced impressive gains thus far year-to-date (i.e., DJIA: +3.00%, S&P 500: +1.76%, Nasdaq: +1.85%). Perhaps, most notable, is the divergence between the indices. The DJIA dramatically leads the S&P 500 and Nasdaq at this juncture. No matter the index, however, markets largely ignored the year’s first geopolitical shock: military action in Venezuela. According to Schwab strategists, equity markets essentially said “nothing to see here,” with minimal disruption to energy prices or Treasury yields as investors processed the news. The muted reaction reflects a fundamental shift in what’s actually driving returns. Retail traders—representing roughly 25% of daily trading volume—have largely put “blinders on” to geopolitical and macro risks, instead chasing the next sector opportunity. That impulse has driven a pronounced rotation into classic cyclicals, with industrials and materials surging year-to-date, a shift that also reflects underlying economic resilience. The bond market’s equally measured response suggested investors are taking a wait-and-see approach; while Venezuelan oil could eventually ease global supply constraints, the practical challenges of infrastructure investment and production timelines remain formidable obstacles unlikely to materialize quickly.
Separate from market dynamics, 2026 brings meaningful changes to retirement savings opportunities that warrant attention from investors planning their year ahead. According to the IRS and detailed in American Century’s 2026 Tax Fast Facts below, 401(k) contribution limits have increased to $24,500. More significantly, SECURE 2.0 provisions are reshaping catch-up opportunities for savers aged 50 and older. Workers in this demographic can now contribute an additional $8,000 in catch-up contributions to their 401(k) or 403(b) plans, bringing total potential contributions to $32,500. But the most significant change targets those in their early 60s: employees aged 60, 61, 62, and 63 gain access to a higher catch-up contribution limit of $11,250—a meaningful increase that provides three additional years of accelerated retirement saving before the standard age 65 or 67 retirement threshold. Additionally, highly compensated employees (i.e., with 2025 FICA wages exceeding $150,000) age 50 and older are now mandated to direct their catch-up contributions to after-tax Roth 401(k) accounts. These adjustments reflect policymakers’ recognition that workers increasingly need flexibility to bolster retirement savings in the years immediately preceding retirement, particularly given extended working lives and evolving economic conditions. For higher-income earners, this also accelerates tax revenue collection, allowing the government to capture taxes on catch-up contributions earlier rather than at retirement.
Below are links to a number of third-party research reports that we have read and analyzed over the past week. We hope you will find the information interesting, useful, and worthwhile.
Schwab:
American Century:
Goldman Sachs:
Invesco:
Capital Group:
Stanley Katz & Lauren Madera, Financial Advisors
ClientFirst Financial Strategies, Inc.
937-293-5500
Source for weekly stock market returns: Barron’s.
Source for inflation reading: “Inflation drops to lowest level in months, defying expectations of uptick,” abcNEWS, December 18, 2025.
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