Big Tech earnings, a key Fed meeting, and Trump’s first full week in office: What to know this week
January 26, 2025
The S&P 500 (^GSPC) just capped its best first four trading days under a new president since Ronald Reagan’s first week in 1985.
The week ahead will bring investors a deluge of news that will put that rally to the test.
Earnings from more 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 as the week’s busiest. Starbucks (SBUX), Exxon (XOM), and Chevron (CVX) are also set to report.
On Wednesday afternoon, the Federal Reserve will also announce its latest monetary policy decision, with the central bank expected to keep interest rates unchanged and investors focused on what Fed Chair Jay Powell has to say about 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 four day trading week. Over the last five days, the S&P 500 and Dow have gained more than 2.8%; the tech index is leading gains over that period, rising more than 3.1%.
Markets welcomed Trump’s initial days in office as limited news on tariffs steadied investors and a massive AI investment announcement helped boost tech stocks.
Four trading days into Trump 2.0, it’s been clear that the new president is in the driver’s seat of the stock market.
On Tuesday, markets rallied as 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. “Thus far, we have seen less macro disruption than initially expected.”
On Wednesday, Trump sparked an AI rally after he announced a new $500 billion private-sector investment dubbed “Stargate” to build artificial intelligence infrastructure in the US, with Oracle (ORCL), ChatGPT creator OpenAI, and Japanese conglomerate SoftBank (9984.T) among those committing to the joint venture.
Oracle and SoftBank — along with Microsoft and Nvidia (NVDA) — rallied on the news.
In week one, not only were the market’s fears on tariffs not realized, but the still-hot AI trade came back to the fore. A comfortable start to the second Trump administration.
With a busier week of market news expected, investor focus on Trump’s policies will be tested as the typically market-moving Fed announcement highlights the week’s economic news.
Data from the CME Group shows markets are pricing in a nearly 100% chance the central bank holds rates steady when it releases its latest policy decision at 2:00 p.m. ET on Wednesday. Powell’s press conference, slated to start at 2:30 p.m. ET, is likely the larger source of market volatility.
This past Thursday, Trump said in a virtual appearance at the World Economic Forum in Davos that with oil prices going down he’d “demand that interest rates drop immediately.” These comments stirred discussion about a potential clash with the Federal Reserve.
Even so, the press conference may be less exciting than normal, according to JPMorgan chief US economist Michael Feroli. “Powell’s post-meeting press conference has often stolen the show on FOMC day in recent years,” Feroli wrote.
“For next week, however, we expect he will adopt more of a ‘duck and cover’ approach. In particular, we anticipate he will indicate that each Committee participant is using their own conditioning assumptions on what trade policies are ultimately adopted, and that the only thing decided at the meeting was the monetary policy statement agreed to next Wednesday”
Several key readings on the health of the US economy are also due out throughout the week.
On Thursday, the first estimate of fourth quarter GDP is expected to show the US economy grew at an annualized pace of 2.6% in the final three months of 2024, below the 3.1% pace seen in 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 data dump at the end 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 companies have had a strong start to earnings season. The index is expected to grow earnings by 12.7% compared to the year prior in the fourth quarter, per FactSet data.
But much of that growth still relies on the performance of the “Magnificent Seven” tech stocks. And four of those companies — Tesla, Meta, Microsoft, and Apple — will report in the week ahead.
This group of seven tech stocks is expected to grow earnings by 21.7% in the fourth quarter compared to the 9.7% earnings growth projected for the other 493 tech stocks.
As the chart below shows, this earnings growth gap is expected to narrow throughout 2025, prompting many equity strategists to call for a broadening of the stock market rally outside of large-cap tech.
Though as Venu Krishna, head of US equity strategy at Barclays, pointed out in his 2025 outlook, given the large earnings growth expected for Big Tech throughout the year, the group is “likely to remain as critical of an EPS growth driver for the S&P 500 as the group was [in 2024].”
Notably, earnings growth for the Magnificent Seven is expected to reaccelerate in the second half of the year after a moderate slowdown in the year’s first six months.
Economic data: Chicago Fed National Activity Index, December (-0.12 previously); New home sales, month-over-month, December (+6.6% expected, +5.9% previously)
Earnings: AT&T (T), Nucor (NUE), SoFi (SOFI), Western Alliance Bancorporation (WAL)
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)
Economic data: Fourth quarter GDP, first estimate (+2.6% annualized rate expected, +3.1% previously); Personal consumption, fourth quarter advance estimate (+3.1% annualized rate expected, +3.7% previously); Core PCE, quarter-over-quarter, fourth quarter advance estimate (+2.2% previously); Initial jobless claims, Jan. 25 (223,000 prior)
Earnings: Apple (AAPL), Blackstone (BX), Caterpillar (CAT), Comcast (CMCSA), Dow (DOW), Deckers Outdoors (DECK), Intel (INTC), Mastercard (MA), Mobileye (MBLY), Southwest Airlines (LUV), UPS (UPS), United States Steel (X), Visa (V)
Economic calendar: Core PCE index, month-over-month, December (+0.2% expected, +0.1% previously); Core PCE index, year-over-year, December (+2.8% expected, 2.8% previously); Employment cost index, fourth quarter (1% expected, 0.8% previously)
Earnings: Charter Communications (CHTR), Chevron (CVX), Colgate (CL), Exxon Mobil (XOM), Phillips 66 (PSX)
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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