The S&P 500 (^GSPC) just capped its best first 4 trading days under a latest president since Ronald Reagan’s first week in 1985.
The week ahead will bring investors a deluge of reports that may put that rally to the test.
Earnings from greater than 100 members of the S&P 500 — highlighted by results from tech heavyweights Meta (META), Microsoft (MSFT), Apple (AAPL), and Tesla (TSLA) — are set for release, with Wednesday serving because the week’s busiest. Starbucks (SBUX), Exxon (XOM), and Chevron (CVX) are also set to report.
On Wednesday afternoon, the Federal Reserve can even announce its latest monetary policy decision, with the central bank expected to maintain rates of interest unchanged and investors focused on what Fed Chair Jay Powell has to say concerning the balance of 2025.
Last week, the S&P 500, Nasdaq Composite (^IXIC), and Dow Jones Industrial Average (^DJI) each rallied during a holiday-shortened 4 day trading week. During the last five days, the S&P 500 and Dow have gained greater than 2.8%; the tech index is leading gains over that period, rising greater than 3.1%.
On Tuesday, markets rallied because the dollar fell after Trump held back from firing off the barrage of universal tariff hikes some expected on his first day in office.
Citi equity strategist Scott Chronert wrote in a note to clients on Friday that throughout the week the implied volatility in rates, the US dollar, and oil all moved lower.
“The pricing out of some downside policy catalysts was a cross-asset phenomena,” Chronert said. “So far, we’ve got seen less macro disruption than initially expected.”
On Wednesday, Trump sparked an AI rally after he announced a latest $500 billion private-sector investment dubbed “Stargate” to construct artificial intelligence infrastructure within the US, with Oracle (ORCL), ChatGPT creator OpenAI, and Japanese conglomerate SoftBank (9984.T) amongst those committing to the three way partnership.
Oracle and SoftBank — together with Microsoft and Nvidia (NVDA) — rallied on the news.
In week one, not only were the market’s fears on tariffs not realized, however the still-hot AI trade got here back to the fore. A cushty begin to the second Trump administration.
With a busier week of market news expected, investor concentrate on Trump’s policies might be tested because the typically market-moving Fed announcement highlights the week’s economic news.
Data from the CME Group shows markets are pricing in an almost 100% likelihood the central bank holds rates regular when it releases its latest policy decision at 2:00 p.m. ET on Wednesday. Powell’s press conference, slated to begin at 2:30 p.m. ET, is probably going the larger source of market volatility.
This past Thursday, Trump said in a virtual appearance on the World Economic Forum in Davos that with oil prices happening he’d “demand that rates of interest drop immediately.” These comments stirred discussion a few potential clash with the Federal Reserve.
Even so, the press conference could also be less exciting than normal, in keeping with JPMorgan chief US economist Michael Feroli. “Powell’s post-meeting press conference has often stolen the show on FOMC day lately,” Feroli wrote.
“For next week, nonetheless, we expect he’ll adopt more of a ‘duck and canopy’ approach. Particularly, we anticipate he’ll indicate that every Committee participant is using their very own conditioning assumptions on what trade policies are ultimately adopted, and that the one thing decided on the meeting was the monetary policy statement agreed to next Wednesday”
President Donald Trump (L) and Federal Reserve Governor Jerome Powell at a nomination ceremony on the White House in Washington D.C., in 2017. (Xinhua/Yin Bogu via Getty Images) ·Xinhua News Agency via Getty Images
Several key readings on the health of the US economy are also due out throughout the week.
On Thursday, the primary estimate of fourth quarter GDP is predicted to indicate the US economy grew at an annualized pace of two.6% in the ultimate three months of 2024, below the three.1% pace seen within the prior quarter.
Friday will feature a fresh reading of the Fed’s preferred inflation gauge, the Personal Consumption Expenditures index, with economists expecting annual “core” PCE — which excludes the volatile categories of food and energy — to have clocked in at 2.8% in December, unchanged from November. Over the prior month, economists project “core” PCE inflation rose 0.2%, faster than the 0.1% seen in November.
RBC Capital Markets head of US rate strategy Blake Gwinn wrote in a note to clients on Friday that the information dump at the tip of the week — combined with Trump’s policies — could leave the Fed “playing third fiddle” in markets.
Gwinn argued either commentary from Trump or the looming data could “quickly render stale anything Powell says at next week’s press conference.”
S&P 500 corporations have had a powerful begin to earnings season. The index is predicted to grow earnings by 12.7% in comparison with the 12 months prior within the fourth quarter, per FactSet data.
But much of that growth still relies on the performance of the “Magnificent Seven” tech stocks. And 4 of those corporations — Tesla, Meta, Microsoft, and Apple — will report within the week ahead.
This group of seven tech stocks is predicted to grow earnings by 21.7% within the fourth quarter in comparison with the 9.7% earnings growth projected for the opposite 493 tech stocks.
Though as Venu Krishna, head of US equity strategy at Barclays, identified in his 2025 outlook, given the big earnings growth expected for Big Tech all year long, the group is “more likely to remain as critical of an EPS growth driver for the S&P 500 because the group was [in 2024].”
Notably, earnings growth for the Magnificent Seven is predicted to reaccelerate within the second half of the 12 months after a moderate slowdown within the 12 months’s first six months.
Economic data: Chicago Fed National Activity Index, December (-0.12 previously); Recent home sales, month-over-month, December (+6.6% expected, +5.9% previously)
Economic data: Durable goods orders, December (+0.8% expected, -1.2% previously); FHFA house price index, month-over-month, November (+0.4% previously), S&P CoreLogic Case-Shiller home prices, 20-city index, month-over-month seasonally adjusted, November (+0.3% expected, +0.32% previously); Conference Board Consumer Confidence, January (105.6 expected, 104.7 previously); Richmond Fed manufacturing index, January (-10 previously)
Earnings: Boeing (BA), General Motors (GM), JetBlue (JBLU), Lockheed Martin (LMT), Logitech (LOGI), Royal Caribbean Cruises (RCL), SAP (SAP), Starbucks (SBUX), Sysco (SYY)
Economic data: MBA Mortgage Applications, week ended Jan. 24 (+0.1% previously); FOMC rate decision (no change expected)
Earnings: Tesla (TSLA), Meta (META), Microsoft (MSFT), ADP (ADP), ASML (ASML), General Dynamics (GD), IBM (IBM), Nasdaq (NDAQ), Progressive (PGR), ServiceNow (NOW), T-Mobile (TMUS), V.F. Corporation (VFC)