Last week marked the official start of earnings season. JPMorgan Chase, Bank of America, Wells Fargo, Goldman Sachs, and Morgan Stanley all beat Wall Street earnings expectations. However, those strong results were overshadowed by headlines from the White House calling for a one-year 10% cap on credit card interest rates, pressuring financial stocks and pulling the broader market lower.
Weekly Market Performance
- Dow Jones Industrial Average: -0.22%
- S&P 500: -0.24%
- Nasdaq Composite: -0.50%
- Russel 2000: +2.17%
- Foreign Stocks: +0.66%
- Emerging Markets: +1.23%
The bright spots for the week were foreign stocks, emerging market equities, and small-cap stocks.
Interest Rates and Federal Reserve Uncertainty
Bond yields have moved modestly higher so far this year. The 10-year Treasury yield has climbed from 4.163% on January 1 to 4.227%, while the 2-year Treasury yield ended last week at 3.594%, up from 3.475% at the start of the year.
Part of this move reflects recent media rhetoric following reports that Federal Reserve Chair Jerome Powell was served subpoenas from the Department of Justice related to Fed renovation projects. Powell’s term as Fed Chair ends on May 15, 2026, though his separate term as a Fed Governor runs through January 31, 2028, giving him the option to remain on the Board.
If former President Trump were able to remove Powell, it could lead to greater political influence over interest rate policy. Markets remain concerned that an overly dovish Federal Reserve could reignite inflation, ultimately pushing long-term interest rates higher. This situation will be closely watched.
Inflation and Economic Data Remain Tame
Last week’s economic data was relatively calm. The Consumer Price Index (CPI) rose 0.3% in December, while core CPI, excluding food and energy, increased 0.2%. The Producer Price Index (PPI) also rose 0.2%.
Meanwhile, retail sales for November jumped 0.6%, highlighting continued consumer resilience and spending strength.
With businesses and consumers still spending aggressively, the economy expanding, and inflation readings remaining modest, Federal Reserve rate decisions will be increasingly impactful.
Upcoming Federal Reserve Meetings
Chair Powell has three remaining Federal Open Market Committee (FOMC) meetings to guide interest rate policy:
- January 27–28
- March 17–18
- April 28–29
By the June meeting, markets should be operating under a new Federal Reserve Chair.
Tariffs, Trade Policy, and Global Implications
Trump has recently expanded tariff threats beyond traditional trade disputes. According to the Wall Street Journal, he is considering an additional 10% tariff on European nations as leverage to pressure Denmark into selling Greenland to the United States.
Under the proposal:
- A 10% tariff would begin February 1
- A 25% tariff would take effect June 1 without cooperation
- Affected countries would include the United Kingdom, Netherlands, Denmark, Norway, Sweden, France, and Germany
These tariffs would be layered on top of existing tariffs—approximately 15% on most EU goods and 10% on most UK imports.
Using the U.S. economy as leverage in geopolitical negotiations will be worth watching. So far, American companies and consumers have absorbed higher costs without meaningful short-term economic damage. The key question remains: how much additional slack does exist in the system?
Looking Ahead
Since Trump took office one year ago, consumers, businesses, and financial markets have faced an extraordinary amount of change. Looking forward, there appears to be no end in sight.
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Thank you for reading!
Paul
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
All market data sourced from The Wall Street Journal, January 16, 2026.
