American markets will fall silent Monday as Wall Street observes Martin Luther King Jr. Day, giving investors an extended weekend to reflect on a turbulent start to 2026—and to prepare for what comes next. The holiday carries additional significance this year: January 20 marks exactly one year since Donald Trump's second inauguration, making Monday both a moment of remembrance and a pivot point for policy expectations.

When trading resumes Tuesday, investors will face a compressed four-day week packed with earnings reports, economic data from China, and the continued unfolding of the World Economic Forum in Davos. The pause offers a rare moment to step back and assess the landscape.

What's Closed, What's Open

For investors, here's the Monday rundown:

  • Stock markets: NYSE and Nasdaq closed all day
  • Bond markets: U.S. Treasury market closed per SIFMA guidelines
  • Options and futures: CME Group exchanges open with modified hours
  • Banks: Most branches closed; ATMs and online banking available
  • Crypto: Digital asset markets trade 24/7, unaffected by the holiday

International markets continue normal operations. The London Stock Exchange, European exchanges, and Asian markets including Hong Kong and Tokyo will be open Monday, meaning global events could move U.S. futures overnight.

The One-Year Report Card

Markets have delivered solid returns since Trump's second inauguration, though the path has been anything but smooth:

  • S&P 500: Up roughly 17.9% since January 20, 2025, despite a nearly 20% drawdown following April's tariff announcements
  • Dow Jones: Approaching 50,000, having recovered from its April lows
  • Nasdaq: The tech-heavy index has benefited from AI enthusiasm, though mega-caps have struggled in early 2026
  • Russell 2000: Small caps are finally having their moment, with a historic 10-day winning streak against the S&P 500

The volatility has been notable. From April's tariff shock to questions about Federal Reserve independence, investors have navigated an unusually policy-driven market environment.

Year Two Expectations

What might the second year bring? Based on administration signals and market positioning, several themes are emerging:

Tariff evolution: The administration shows no signs of backing away from trade policy as a tool. The new 25% semiconductor tariff that took effect this month may be a preview of more targeted duties ahead. Markets have largely adapted to tariff risk, but escalation could still surprise.

Fed transition: With Jerome Powell's term expiring in May, the selection of the next Federal Reserve chair looms as perhaps the most consequential decision of year two. Current speculation centers on Kevin Warsh, formerly of the Fed board, as a leading candidate.

Tax policy: The "One Big Beautiful Bill" passed by Congress promises tax refund boosts in the first half of 2026, with aggregate stimulus estimated at $30-100 billion. Consumer spending could get a lift.

Housing initiatives: Trump has floated allowing 401(k) withdrawals for home down payments—a proposal that could reshape both retirement planning and housing demand if implemented.

What the Shortened Week Brings

When markets reopen Tuesday, investors will face a packed calendar:

China GDP (Monday): Beijing releases fourth-quarter growth data while U.S. markets are closed. Futures and Tuesday's open will reflect the market's verdict on Chinese economic health.

Netflix earnings (Tuesday): The streaming giant reports after the bell, with investors focused on subscriber trends and 2026 guidance.

United Airlines earnings (Wednesday): Travel demand insights from the airline sector.

Davos continues: The World Economic Forum runs through Friday, with potential market-moving headlines from global leaders.

Fed blackout: Federal Reserve officials enter their pre-meeting quiet period ahead of the January 27-28 FOMC meeting.

Historical Patterns

For what it's worth, MLK Day weeks have historically shown mixed results. Research from Schaeffer's Investment Research identified specific stocks that have tended to perform well or poorly following the holiday, though such patterns should be taken with appropriate skepticism.

More broadly, second-year presidential markets have historically outperformed first years, as policy uncertainty tends to decline once an administration's priorities become clearer. Whether that pattern holds in an era of governing by executive order remains to be seen.

How to Use the Pause

For long-term investors, the three-day weekend offers an opportunity to:

  • Review allocations: Has the rally created unintended concentration? Is your portfolio properly diversified across asset classes and geographies?
  • Check your plan: Are you on track for 2026 financial goals? Does your emergency fund remain adequate?
  • Assess risk tolerance: Could you handle another 20% drawdown like April? Your portfolio should match your true risk capacity.
  • Resist overtrading: The urge to react to every headline has been costly for many investors. The holiday pause is a reminder that patient capital often wins.

When the opening bell rings Tuesday at 9:30 AM Eastern, year two of the Trump economic experiment will officially be underway. Rest up—it promises to be another eventful ride.