Investors will be counting on a strong corporate earnings season to keep the rally in U.S. stocks intact as they digest a wave of domestic policy proposals and heightened geopolitical tensions to start the year. After banks and other financial firms kicked off fourth-quarter reports, a more diverse set of companies including Netflix NFLX.O , Johnson & Johnson JNJ.N and Intel INTC.O will post results in the coming week as earnings season picks up steam. Following robust performance in 2025, major equity indexes overall have climbed to start the new year, even as they gyrated this week and volatility measures crept higher.
On Thursday, the S&P 500 .SPX rose closer to record highs, although the benchmark index remained down on the week. After strong gains in 2025, shares of major banks including JPMorgan JPM.N and Wells Fargo WFC.N pulled back following their results. Among the factors pressuring bank stocks was the US President’s newly proposed 10% cap on credit card interest rates, a surprise move that blindsided the industry and also followed the president’s new plan to stop Wall Street firms from buying up single-family homes.
On the international stage, the White House’s aggressive moves and words have also kept investors on edge. The latest global focus centered on Iran, where the President threatened intervention on behalf of protesters in the country though he later was adopting a wait‑and‑see posture. The uncertainty has boosted safe-haven bids for gold XAU= this year while pockets of equity markets such as energy shares have fluctuated, but the major stock indexes have largely been unbothered by news developments so far.
U.S. stock markets are closed on Monday for the Martin Luther King Jr. holiday, but earnings rev up after that, headlined by Netflix results on Tuesday. The streaming giant will draw added attention due to its high-stakes battle with Paramount Skydance PSKY.O for Warner Bros Discovery WBD.O in a deal that stands to shake up the media landscape. Focus will be on corporate outlooks, with hopes high for 2026. S&P 500 companies overall are expected to increase earnings by more than 15% in 2026, with each of the 11 sectors expected to post profit growth of at least roughly 7%.
Investors are also waiting for the U.S. Supreme Court to decide on the legality of the President’s global tariffs, a ruling that could set off asset price volatility. The court on Wednesday also will hear arguments over the President’s attempt to remove Federal Reserve Governor Lisa Cook, bringing fresh attention to the central bank’s independence amid persistent criticism from the President that the Fed has not lowered interest rates sufficiently.
Such concerns about Fed independence erupted this week after news of a criminal investigation into Fed Chair Jerome Powell. The President told Reuters this week he has no plans to fire Powell, whose term as chair ends in May, while he is expected to nominate a new Fed leader soon.
Reporting by Lewis Krauskopf; Editing by David Gregorio.
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