What happens next for the expanding stock market will depend on what happens to corporate earnings and the outlook for interest rates. Stocks are headed for a down week after a shaky start to the fourth quarter earnings season. Among the big banks at the start of the reporting period, retail banking companies such as JPMorgan, Citigroup, Bank of America and Wells Fargo fell this week after disappointing investors. Meanwhile, investment firms Goldman Sachs and Morgan Stanley have seen their shares rise in the latest sign that next year is shaping up to be a productive year for deal-making. However, financials are not representative of the market as a whole, and the idea here is that investors are in for another strong earnings season. After all, the S&P 500 index is already on track for 12% to 15% earnings growth for all of 2026, a not-so-bad outlook that traders are confident companies that are good at predicting on the low side can achieve. “Companies are being conservative in their guidance,” Kim Forrest, investment director at Boke Capital Partners, told CNBC. “So if we get 15% guidance across the board on a cap-weighted basis, this is going to be a pretty good year.” .SPX 5D Mountain S&P 500, 5th Of course, investors need to keep an eye on how confident company executives are in their forward guidance, but the optimism here is key to the market outlook this year. The S&P 500 index is expected to end the year up about 10%, but that view hinges on companies’ ability to prove their underlying businesses are worth the surge, according to a CNBC survey. Mr. Forrest of Boke Capital Partners has set a year-end target for the S&P 500 index higher than Mr. Street’s consensus of 7,935 times, which represents an advance of about 15%, which he said reflects easy monetary policy and a year of active trading. We could see huge IPOs from the likes of OpenAI and SpaceX. But Forrest said there is an upside to that view if the Fed ends up cutting rates by more than the 0.5 percentage point that the market is currently pricing in. The federal funds rate is expected to end this year in the range of 3.00% to 3.25%, up from the currently set 3.50% to 3.75%. “This isn’t me being a cheerleader,” Forrest said. “Here’s the math.” On the interest rate front, investors are watching to see what happens next, as the Justice Department has placed Federal Reserve Chairman Jerome Powell under criminal investigation. The move has been criticized by lawmakers on both sides of the aisle, raising concerns about the central bank’s independence. “The biggest impact on the market is what happens to earnings and interest rates,” David Miller, head of investment at Catalyst Funds, told CNBC. “The interest rate issue is a difficult one,” Miller added, “because we know what Trump wants, we know what Jay Powell wants, and who wins that battle is certainly one of the important answers.” The prospect that the Fed’s independence could be diminished, whether through President Donald Trump’s attacks on Powell or attempts to oust other governors from the board, has so far had no lasting impact on stock markets. However, the risks of undesirable inflation and debt monetization could increase not only in the US but around the world, which is the main reason that drove investors to safe-haven gold and silver last week. “From this year to today or even last month, they’ve been a rocket ship,” Miller said. “But I don’t think it’s going to stop.” @SI.1 5D Mountain Silver, 5-day Certainly, while this dims the outlook for fixed income, it supports a move into alternative assets, Miller said. Regarding stocks, he said that as long as questions remain about the outlook for interest rates, investors should focus on blue-chip companies that are likely to beat earnings expectations. More information from several companies will be provided next week. There are also a number of financial companies, including Charles Schwab, homebuilder DR Horton, streaming company Netflix, aerospace and defense company GE Aerospace, and gold mining company Freeport-McMoRan. Of the roughly 7% of S&P 500 companies that have reported so far, about 79% beat expectations, according to FactSet data. The New York Stock Exchange will be closed on Monday, January 19th in observance of Martin Luther King Jr. Day. Week Ahead Calendar All Time (ET). Tuesday, January 20th Earnings: Fastenal, Netflix, Interactive Brokers Group, United Airlines, US Bancorp, 3M, KeyCorp, Fifth Third Bancorp, DR Horton Wednesday, January 21st 10am Construction Spending (September, October) Earnings: Kinder Morgan, Johnson & Johnson, Halliburton, Citizens Financial Group, Truist Financial, Charles Schwab Thursday; Jan. 22, 8:30 a.m. Personal Income (October, November) 11 a.m. Kansas City Fed Manufacturing Index (January) Revenues: Intuitive Surgical, Capital One Financial, Intel, CSX, Northern Trust, Procter & Gamble, McCormick & Company, Huntington Bancshares, GE Aerospace, Freeport-McMoRan , Abbott Laboratories 23rd 9:45am S&P Global PMI Comprehensive Report (January) 10am Michigan Sentiment Final Price (January) Financial Results: SLB
