The Week Ahead: Earnings Season Heats Up as Markets Eye Trump's Inauguration

The S&P 500 (GSPC) closed its best week since November following a subdued inflation report, easing concerns about the Federal Reserve hiking interest rates in 2025. The market surged, with the S&P 500 gaining over 3%, the Nasdaq Composite (IXIC) rising 2.6%, and the Dow Jones Industrial Average (DJI) leading the rally with a 4% jump.

Market Cues from Inauguration Day

Markets will remain closed on Monday for Martin Luther King Jr. Day, with attention shifting to President-elect Donald Trump's inauguration. Investors are closely monitoring potential tariffs and tax policies that could impact American companies.

Earnings Season in Full Swing

This week, 43 S&P 500 companies are expected to report quarterly results, including Netflix (NFLX), United Airlines (UAL), Johnson & Johnson (JNJ), and 3M Company (MMM). Analyst expectations for earnings growth have improved to 12.5% year-over-year.

Fed Outlook Uncertain

The recent cooler-than-expected inflation reading may have reduced the probability of Fed rate hikes in the near term, but the outcome of next week's policy decision remains uncertain. Markets are currently pricing in one to two rate cuts this year.

Earnings vs. Policy Noise

While earnings season is gaining momentum, political headlines related to President Trump's inauguration are likely to dominate the news cycle. Investors may have to contend with uncertainties surrounding fiscal, trade, and monetary policies, even amidst solid earnings reports.

Economic Calendar Highlights

* Wednesday: MBA Mortgage Applications, Leading Index
* Thursday: Initial Jobless Claims, Kansas City Fed. Manufacturing Activity
* Friday: S&P Global US Manufacturing PMI, S&P Global Services PMI, University of Michigan Consumer Sentiment, Existing Home Sales

Key Events for the Week

* Monday: Markets closed for Martin Luther King Jr. Day
* Tuesday: Earnings from NFLX, MMM, and UAL
* Wednesday: Earnings from JNJ, HAL, and GE
* Thursday: Earnings from AAL, CSX, and GE Aerospace
* Friday: Earnings from AXP and VZ