Business
Wall Street pins rally hopes on earnings amid Trump policy jitters
After banks and other financial institutions set the tone with early fourth-quarter results, a wider array of companies — including Netflix, Johnson & Johnson, and Intel — are scheduled to report earnings this week. Investors are banking on strong results and optimistic guidance to counter rising political and macroeconomic uncertainties.
In 2025, after a robust run, major U.S. equity indexes have extended gains into the new year, though they slipped modestly this week and volatility indicators edged higher. The S&P 500 ended the week slightly lower but remained close to record highs.
Last week, the banking sector was a key source of market pressure. Shares of major lenders, including JPMorgan and Wells Fargo, fell after their earnings releases, even though the companies had delivered strong performance in 2024. Sentiment toward the sector was further hit by President Donald Trump’s proposal to cap credit card interest rates at 10%, a plan that caught the industry off guard. In addition, his move to bar Wall Street firms from buying single-family homes added to the sell-off in financial stocks/
Beyond corporate results, investors are grappling with both domestic and international developments.
On the global front, Trump’s rhetoric and actions have kept markets on edge, with particular focus on Iran after the president threatened intervention in support of protesters before later adopting a more cautious stance.
The uncertainty has driven demand for traditional safe havens such as gold, while certain equity segments, including energy stocks, have seen increased volatility. However, the major U.S. stock indexes have so far remained relatively resilient in the face of geopolitical headlines.The U.S. markets are closed on Monday (January 19) for the Martin Luther King Jr. holiday, but the earnings calendar accelerates thereafter, with Netflix reporting on Tuesday. The streaming company’s results are expected to draw heightened attention amid its high-profile contest with Paramount Skydance for Warner Bros Discovery, a potential deal that could significantly reshape the media industry. More broadly, investors are focused on company guidance, with optimism building around prospects for 2026. Earnings for S&P 500 companies are projected to grow by more than 15% next year.
Alongside earnings, questions around Federal Reserve independence are also in focus. Investors are awaiting a U.S. Supreme Court decision on the legality of Trump’s global tariffs, a ruling that could trigger volatility across asset classes. The court is also set to hear arguments related to Trump’s attempt to remove Federal Reserve Governor Lisa Cook, highlighting ongoing tensions between the administration and the central bank.
Concerns intensified last week following reports of a criminal investigation involving Fed Chair Jerome Powell. Trump told Reuters that he does not plan to dismiss Powell, whose term as chair ends in May, though the president is expected to nominate a successor in the coming months. Analysts have warned that the end of Powell’s tenure could prove pivotal for perceptions of Fed independence, with potential implications for inflation expectations and the cost of financing U.S. government debt.
