Stock Market Week in Review: S&P 500 Breaks 7,000 as Value Stocks and Momentum Leaders Emerge
The S&P 500 reached historic milestones this week, crossing the 7,000-point threshold for the first time on January 28, 2026, capping off five consecutive days of gains and finishing January up nearly 2%. This rally was driven by AI optimism and strong tech earnings, with analysts expecting S&P 500 company profits to increase 15.5% in 2026.
Top 5 Value Stocks Trading Near 52-Week Lows
These stocks are currently trading at significant discounts to their estimated fair values with strong fundamental metrics:
- Old National Bancorp (ONB) - Trading at $24.02 with an estimated fair value of $47.68, representing a 49.6% discount to intrinsic value. This regional bank has rebuilt its balance sheet as rates stabilized and deposits recovered.
- TowneBank (TOWN) - Currently priced at $36.53 versus a fair value estimate of $72.33, offering a 49.5% margin of safety. The stock presents strong value based on cash flow analysis.
- Huntington Bancshares (HBAN) - Trading at $18.77 compared to an estimated value of $36.40, a 48.4% discount. The stock showed positive momentum with high trading volume of 212 million shares.
- Heritage Financial (HFWA) - Priced at $25.20 with a fair value of $49.26, representing a 48.8% discount. Regional banks like HFWA are positioned to benefit from economic recovery as confidence returns.
- Fifth Third Bancorp (FITB) - Trading near its 52-week range with strong fundamentals and high trading activity of 104 million shares. The stock is undervalued based on cash flow metrics and poised for a regional banking sector rebound.
Top 5 Momentum Stocks With Strong Recent Performance
These stocks demonstrate exceptional momentum with strong upward price action:
- Northern Trust Corporation (NTRS) - Surged 17.7% over the past three months, significantly outperforming the S&P 500's 0.5% gain in the same period. The wealth management firm holds a Zacks Rank #1 (Strong Buy) with a Momentum Score of A, and its earnings estimate for the current year has climbed 4.6% in the last 60 days.
- Lumentum Holdings (LITE) - Jumped 15.52% week-over-week as investors loaded portfolios ahead of earnings. The stock has surged approximately 100% since early November results, driven by bullish sentiment on price hikes leading to better-than-expected margins and optical circuit switching opportunities.
- Fluence Energy (FLNC) - Rose 14.22% week-over-week as investors positioned ahead of Q1 fiscal year 2026 earnings scheduled for February 4. The energy storage company is benefiting from strong investor interest in the renewable energy sector.
- Simmons First National Corporation (SFNC) - Gained 12.1% over the past three months with a Momentum Score of A. The holding company for Simmons Bank earned a Zacks Rank #1, with earnings estimates rising 5.2% in the past two months.
- Interactive Brokers Group (IBKR) - Advanced 11.7% in the last three months, crushing the S&P 500's modest 0.5% gain. The automated online brokerage holds a Zacks Rank #1 and has seen its current year earnings estimate increase 5.4% over the past 60 days, with a Momentum Score of A.
Key Market Trends and Risks
Major Trends
AI Supercycle Continues - The market rally is being propelled by unprecedented AI optimism, with technology stocks comprising nearly half of the S&P 500. Tech sector profits are projected to increase by 27% in Q4, far outpacing the overall S&P 500's estimated 9.2% rise.
Regional Bank Recovery - Regional banks that were previously overlooked and undervalued are rebounding as deposits stabilize, rates ease, and confidence returns to local economies.
Strong Earnings Season - Approximately 25% of the S&P 500 is set to report quarterly earnings in the week ahead, with major companies including Eli Lilly, AMD, and Walt Disney scheduled to announce results.
Critical Risks
Inflation Resurgence - Inflation could surprise to the upside and potentially exceed 4% by the end of 2026, driven by lagged tariff effects, fiscal deficit expansion (possibly exceeding 7% of GDP), tighter labor markets from immigration policy shifts, and accommodative monetary conditions. Core inflation remained at an above-target annual rate of 2.8% in November.
Federal Reserve Policy Uncertainty - The Fed held interest rates steady in January 2026, with markets now anticipating no rate cuts until June. Powell indicated the Fed remains well-positioned to make decisions on a meeting-by-meeting basis, but competing inflation and labor market risks create uncertainty.
Valuation Concerns - After entering the fourth consecutive year of a bull market, investors are expressing caution regarding soaring valuations, particularly for prominent AI companies. Jim Cramer issued profit-taking warnings, suggesting unrealized gains on high-flying stocks don't "count".
Government Shutdown Risk - Another shutdown looms at the end of January if Congress can't make progress on government funding bills, which could disrupt economic data collection, damage U.S. credit ratings, and send yields higher.
Corporate Default Risks - The corporate default rate has been somewhat elevated since late 2023, which should weigh on high-yield bond and bank loan markets. Regional bank credit quality requires monitoring as this sector often shows warning signs first.
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