Company earnings and what happens with the interest rate outlook will unlock what’s next for a broadening stock market. Stocks are headed for a down week following an uneven start to the fourth-quarter earnings season. Of the big banks that kick off the reporting period, the retail banking players — JPMorgan, Citigroup, Bank of America, Wells Fargo — tumbled this week after disappointing investors. On the other hand, the investment firms Goldman Sachs and Morgan Stanley are higher week to date in the latest sign that the coming year is about to be a fruitful one for dealmaking. But the financials are hardly representative of the overall market, and the thinking here is that investors are in for another strong reporting period. After all, for the full year 2026, the S & P 500 is already expected to post earnings growth of 12% to 15% — a not-too-shabby outlook that traders are confident companies adept at lowballing estimates can deliver on. “Companies are conservative in their guidance,” Kim Forrest, investment chief at Bokeh Capital Partners, told CNBC. “So, if we’re getting 15% guidance overall — cap-weighted — it’s going to be a pretty good year.” .SPX 5D mountain S & P 500, 5-day Of course, investors will have to keep an eye on how confident corporate executives are in their forward guidance, but any optimism here is key to this year’s market outlook. While the S & P 500 is expected to end this year with a roughly 10% gain, CNBC’s survey shows, that view rests on companies’ ability to prove their underlying businesses are worthy of their steep multiples. Bokeh Capital Partners’ Forrest has an S & P 500 year-end target that is higher than the Street’s consensus: 7,935, a number representing a roughly 15% advance that she said reflects easier monetary policy, and a buzzy year for dealmaking. Potential mega-IPOs could come from OpenAI and SpaceX, among others. However, there’s upside to that view, Forrest said, if the Federal Reserve winds up lowering rates by more than the half percentage point 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%, down from 3.50% to 3.75% where it’s set currently. “This isn’t me being a cheerleader,” Forrest said. “This is the math.” On the interest rate front, investors are focused on what could be next now that the Department of Justice has subjected Fed Chair Jerome Powell to a criminal investigation . The move, which has been criticized by lawmakers on both sides of the aisle, has spurred fears around the central bank’s independence. “The biggest thing that affects markets is earnings and what happens to interest rates,” David Miller, investment chief at Catalyst Funds, told CNBC. “And the interest rate question is a tricky one,” Miller added, “Because, we know what Trump wants. And, we know what Jay Powell wants. And, who’s going to win that fight is certainly one key answer.” The prospect of a potentially less independent Fed achieved either through President Donald Trump’s attacks on Powell , or through his attempts to oust other governors on the board, has had no lasting impact on the stock market thus far. However, it could raise the risk of unwanted inflation and debt monetization not just in the U.S. but across the globe, key reasons for driving investors into safe haven assets gold and silver this past week. “They’ve been a rocket ship year to date, or last month,” Miller said. “But I don’t think that’s about to stop.” @SI.1 5D mountain Silver, 5-day Indeed, that supports a case for a push into alternative assets, while dimming the outlook for fixed income, Miller said. In equities, he said investors should stick to quality companies likely to beat earnings expectations so long as the interest rate outlook remains a question. Next week will bring more information from a smattering of companies. There are more financials such as Charles Schwab, homebuilder D.R. Horton, streaming company Netflix, aerospace and defense firm GE Aerospace, as well as gold miner Freeport-McMoRan, among others. Of the roughly 7% of S & P 500 companies that have reported thus far, roughly 79% have beat expectations, according to FactSet data. The New York Stock Exchange will be closed on Monday, Jan. 19 for Martin Luther King, Jr. Day. Week ahead calendar All times ET. Tuesday, Jan. 20 Earnings: Fastenal , Netflix , Interactive Brokers Group , United Airlines , U.S. Bancorp , 3M , KeyCorp , Fifth Third Bancorp , D.R. Horton Wednesday, Jan. 21 10 a.m. 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) Earnings: Intuitive Surgical , Capital One Financial , Intel , CSX , Northern Trust , Procter & Gamble , McCormick & Co. , Huntington Bancshares , GE Aerospace , Freeport-McMoRan , Abbott Laboratories Friday, Jan. 23 9:45 a.m. S & P Global PMI Composite preliminary (January) 10 a.m. Michigan Sentiment final (January) Earnings: SLB
Big earnings reports and worries around the interest rate outlook could sway markets next week