Global Highlights This Week: Focus on Fed Rate Decision, "Magnificent 7" Earnings Blitz
The US stock market endured another volatile week driven by President Trump's comments.
Trump initially threatened tariffs on eight European countries supporting Greenland, triggering a sharp sell-off in US stocks. But just days later, he abruptly announced the tariff threat was off, allowing the market to recover most of its losses.
For the week:Dow Jones fell 0.53%, S&P 500 declined 0.35%, Nasdaq dipped less than 0.1%.
Yung-Yu Ma, Chief Investment Strategist at PNC Financial Services Group, commented:
"The past few days felt like a short but steep rollercoaster ride. I'm not sure if it's fully over, but at least the most intense phase seems to have passed."
This week, market attention shifts back to macro data, monetary policy, and corporate earnings — with the Federal Reserve's policy meeting set to be the biggest highlight.
Consensus expects the Fed to keep the federal funds rate target range unchanged at 3.50%–3.75% when it announces on Wednesday Eastern Time.
Investors will zero in on the number of dissents, plus the accompanying statement and Powell's comments, to gauge the timing and pace of any future rate cuts.
HSBC economists noted in a report:
"We expect Fed Chair Powell to stress that future rate adjustments will depend on how economic data evolves."
Money market pricing fully prices in a 25 bps cut for July, with a decent chance of another cut by year-end.
On the earnings front, roughly one-fifth of S&P 500 companies will report quarterly results this week — including four of the "Magnificent 7": Apple, Microsoft, Meta, and Tesla.
(This Week's Key Earnings Highlights)
After three straight years of double-digit returns, the S&P 500 is up about 1% YTD in 2026. Its current valuation sits above 22× forward earnings — well above the long-term average of 15.9×.
Chris Galipeau, Senior Market Strategist at Franklin Templeton, said:
"That means earnings need to deliver a convincing beat."
He added:
"We might get distracted by economic data or geopolitical events like Greenland, but ultimately it's corporate profits that drive the market."
A central theme this earnings season: Are companies finally starting to see real returns from AI-related investments? Late 2025 saw market concerns that massive capex on data centers and infrastructure might not pay off, which weighed on tech and AI stocks.
PNC's Ma noted:
"The key is whether big S&P 500 companies continue pushing AI adoption and strategies — that will convince investors AI isn't just an 'infrastructure build' story, but one that truly creates value."
At the same time, investors remain on high alert for geopolitical "black swans" and any other policy moves from the Trump administration.
Galipeau warned:
"If the Greenland issue spirals, combined with tariff threats or similar factors, it could clearly dent market confidence and put meaningful pressure on stocks."
This Week's Major Economic Events:
Monday (Jan 26): US Nov Durable Goods Orders MoM, Germany Jan IFO Business Climate Index, US Jan Dallas Fed Business Activity Index
Tuesday (Jan 27): US Nov FHFA House Price Index MoM, US Nov S&P/CS 20-City Composite NSA YoY, US Jan Conference Board Consumer Confidence, US Jan Richmond Fed Manufacturing Index
Wednesday (Jan 28): Bank of Canada rate decision + Monetary Policy Report, Australia Dec CPI NSA, Germany Feb GfK Consumer Climate
Thursday (Jan 29): Fed FOMC rate decision, Fed Chair Powell press conference, Eurozone Jan Economic Sentiment Index, US Nov Trade Balance, Brazil central bank rate decision
Friday (Jan 30): Eurozone Q4 GDP YoY flash, France Q4 GDP, US Dec PPI, US Jan Chicago PMI