S&P 500 Rallies Amidst 100+ Company Earnings Releases and Fed Decision
The S&P 500 (^GSPC) has just concluded its best four-day trading performance since Ronald Reagan's inaugural week in 1985. However, the upcoming week will test this rally with an influx of news events.
Earnings Season Continues
Over 100 S&P 500 companies are scheduled to release earnings, with tech giants Meta (META), Microsoft (MSFT), Apple (AAPL), and Tesla (TSLA) dominating the scene. Starbucks (SBUX), Exxon (XOM), and Chevron (CVX) are also expected to report.
Federal Reserve Announcement
On Wednesday afternoon, the Federal Reserve will announce its latest monetary policy decision. The central bank is widely anticipated to maintain interest rates while investors eagerly await Fed Chair Jay Powell's insights into the remainder of 2025.
Early Market Momentum
Last week, the S&P 500, Nasdaq Composite (^IXIC), and Dow Jones Industrial Average (^DJI) all rallied during a four-day trading week shortened by a holiday. Over the past five days, the S&P 500 and Dow have gained more than 2.8%, while the tech index has led the way with gains exceeding 3.1%.
Trump's Influence on Markets
During the first four trading days of Trump's second term, it has become evident that the president is still a major driver of market sentiment. On Tuesday, markets soared as the dollar weakened after Trump refrained from implementing expected tariff hikes.
Additionally, Trump's announcement of a $500 billion private-sector investment in artificial intelligence infrastructure sparked an AI rally, buoying stocks such as Oracle (ORCL), ChatGPT creator OpenAI, and SoftBank (9984.T).
Fed Focus Returns
As market news intensifies this week, investor focus on Trump's policies will be tested when the Fed releases its market-moving announcement.
Data suggests a near-certain probability that the central bank will leave rates unchanged. However, Powell's subsequent press conference is likely to be the main source of market volatility.
Economic Health Check
Several key indicators of the US economy's health will also be released throughout the week. The first estimate of fourth-quarter GDP is expected to show annualized growth of 2.6%, below the 3.1% recorded in the previous quarter.
Additionally, the Personal Consumption Expenditures index, a measure of inflation preferred by the Fed, is projected to have remained at 2.8% in December.
Big Tech Earnings
S&P 500 companies have kicked off earnings season with a strong showing. However, much of this growth is driven by the "Magnificent Seven" tech stocks, including Tesla, Meta, Microsoft, and Apple.
While earnings growth for these tech giants is expected to decelerate in the first half of the year, it is likely to reaccelerate significantly in the second half, solidifying their importance as drivers of S&P 500 growth.
Weekly Calendar
Monday
* Chicago Fed National Activity Index
* New home sales
Tuesday
* Durable goods orders
* FHFA house price index
* S&P CoreLogic Case-Shiller home prices
* Consumer Confidence
* Richmond Fed manufacturing index
Wednesday
* Mortgage applications
* FOMC rate decision
* Earnings: Tesla, Meta, Microsoft, ADP, ASML, General Dynamics, IBM, Nasdaq, Progressive, ServiceNow, T-Mobile, V.F. Corporation
Thursday
* Fourth-quarter GDP estimate
* Personal consumption estimate
* Core PCE estimate
* Initial jobless claims
Friday
* Core PCE index
* Employment cost index