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Earnings Season Peaks as Fed Policy Takes Focus

Market Movers: The Opening Bell

January 26, 2026

Video Transcript

Let's get to the big story.

Breakdown.

The final week of January is crucial for the global economy.

Major companies like Apple, Meta, and Microsoft are reporting earnings this week, providing insight on AI demand as well as data center investment.

And of course the Federal Reserve is making its first policy decision of the year.

So far, 13% of S&P 500 companies have reported 4th quarter results, and analysts expect.

2.2% rise in earnings per share, potentially marking the 10th consecutive quarter of growth.

Well joining me to weigh in on this Monday morning is Brian Jacobson, chief economic strategist at Annex Wealth Management.

Brian, good morning.

Happy Monday.

Thank you so much for joining me.

So first and foremost, we have a jam-packed week for the markets as we head into the final week of January.

So what key drivers are you watching?

Yeah, thank you for having me, especially on this cold and wintry day.

I hope everybody's staying warm and safe, and I think that really this week we do have a lot of economic data coming out, especially with the Federal Reserve meeting on Wednesday.

But honestly, I'm much more interested in what will the results be for the likes of Microsoft, Mehta, Tesla, and then on Thursday when we get Apple, because right now I think that the broad consensus is that the economy The economy is in an OK place, but what about the torrid growth rate of spending by businesses that has really been fueling the market?

Is there going to be some throttling back of that or not?

What's going to be happening to margins?

So as much as I love looking at what the Fed is going to say and parsing every word, I'm a lot more interested in Wednesday after the close about what's Microsoft going to say and what's Meta going to say.

Yes, speaking of which, we have a jam-packed earnings calendar this week and we get more economic data points.

So so far this year and this month we've had a lot of events move the markets, but here we are heading into the final week of January.

So beyond big tech, is the broader market showing strong earnings growth this quarter?

We believe that it is.

So when we're looking at the companies that have reported so far, and yes, 13% of the S&P 500 has reported, but we've also heard from a lot of the smaller companies as well.

And what we've been hearing is somewhat mixed messages, but it does sound like there's a bit more optimism about 2026 and that optimism on the part of CEOs and CFOs.

It is really important in terms of driving business investment.

And so if they are a little bit more optimistic, that means that they're probably going to be spending more on property, plant equipment, and then also hiring more.

And so as a result, maybe a lot of the travails of the last half of last year, which is about the weakening labor market, maybe the labor market can go from weakness.

To seeing some strength, uh, in the near term here.

And so, if you see this, uh, with the Russell 2000, the margin by which it is beating the S&P 500, we haven't really seen that in quite a long time.

I don't think this is just a head fake.

I think that really we are seeing that broadening out of the market and of the fundamental earnings that's underlying the market.

Brian, I'm glad you brought that up because we have been seeing that outperformance of the Russell 2000 in comparison to the S&P 500.

And even when we break down the gains for the S&P 500, the leadership in terms of sector, we're looking at energy, materials, consumer staples, as well as industrials leading the gains.

So do you expect more of the same as we head into the rest of this year?

That's the way that we're positioning portfolios.

We really tilted away from being in the mega cap, uh, mega cap growth area, more towards those cyclical areas, the ones that you highlighted there, like financials, energy, materials, industrials.

Those are very cyclical.

And as a result, if you do get this cyclical upswing, some improvement in the labor market, we think that that can really be a tailwind for those areas.

So, there's a little bit of fatigue amongst investors about how much spending can go into data centers and into chips, and I think that people are really beginning to focus more on the health of Main Street and the growth that we could see there in 2026.

And those are some of our favorite sectors to really be looking at for opportunities there.

It's not just about chips, it's really more about consumers.

Yes, and speaking of which, this week we get the first Federal Reserve meeting of the year and of course we're not expecting a rate change from the FOMC, but we will be paying attention to Powell's comments.

So in addition to the rate decision as well as what we hear from Powell, what do you think really matters as we head into 2026?

Yeah, so with this upcoming meeting, it's a, it's a big one.

It's like an organizational meeting.

It's the first meeting of the year, and so they're probably going to reaffirm their commitment to the 2% inflation target.

We could see some tweaking of the language there, which I think could be kind of interesting in terms of, you know, the symmetry of the target, um, perhaps something about the labor market as well.

So, there are some of these kind of nuances, uh, with that first meeting of the year that could be very important for setting the stage for what their framework is.

For setting policy for the balance of the year, and I think that a lot of it is going to, as you said, not necessarily lead to a cut on this Wednesday, but I would not take a cut off the table for within the first quarter.

Powell, his term is up at the end of May, and he's going to be overseeing 3 more meetings.

So it's this upcoming one, then one in April, and then another one in May.

And so they might actually cut in the 1st quarter, and that could take people by a little bit of a surprise here.

And Brian, finally, before I let you go this morning we are looking at gold rallying and topping that 5000 level.

We're also looking at the 10-year yield holding above the 4.2% level, and this comes amid all the geopolitical as well as political risks within the US.

So where do you see precious metals as well as bonds going?

Yes, that's been really interesting to watch the movements and the precious.

Metal space with gold eclipsing 5000, and a lot of it is driven by central banks.

They're price insensitive, you know, buying those buying gold instead of buying Treasury securities, but it's not like they're completely shunning Treasury securities.

I think there still is a bid for Treasury securities.

So with gold prices, I think that there is some of that support from central bank activity, but there's also that enthusiasm from retail investors.

And so I'm very cautious about trying to allocate more to gold thinking that we're going to see the gains that we've had over the last year, that that's going to continue.

I doubt that's going to be the case.

When I look at bonds, there isn't as much appetite for Treasury securities, but you look at the demand for corporate bonds and corporate and stocks.

So people still want US assets.

They just might not want US Treasury securities.

Well, Brian, a lot of moving parts.

So thank you so much for joining us this morning to break it down, and I appreciate your perspective.

Thank you so much.

Thank you.

The final week of January is shaping up to be a defining moment for global markets, as investors digest a packed slate of corporate earnings alongside a closely watched Federal Reserve policy decision. Results from major companies such as Apple, Meta, Microsoft, and Tesla are expected to offer critical insight into the trajectory of AI demand, data center investment, and corporate spending plans as the market looks ahead in 2026.

So far, about 13% of S&P 500 companies have reported fourth-quarter results, with analysts projecting a 2.2% increase in earnings per share. If that forecast holds, it would mark the 10th consecutive quarter of earnings growth, reinforcing the view that corporate America remains resilient despite lingering geopolitical and macroeconomic uncertainty.

To unpack what this means for investors, Brian Jacobsen, chief economic strategist at Annex Wealth Management, weighed in on the themes that matter most this week. Jacobsen stressed that the market’s attention is squarely on the largest companies, not just for headline numbers, but for what management teams reveal about future demand and spending behavior.

He noted that optimism among executives can be a powerful signal for the broader economy. As companies express confidence in forward-looking guidance, that often translates into higher spending on property, plant, and equipment, as well as increased hiring. Those signals are especially important as investors try to gauge whether momentum in the labor market can carry into 2026.

Market leadership is also shifting. Energy, materials, and industrials are currently leading gains within the S&P 500, a trend Jacobsen believes could persist. Portfolio positioning, he explained, is increasingly tilting toward these cyclical sectors, reflecting a growing focus on Main Street activity rather than the mega-cap, tech-driven growth that dominated the previous year.

The Federal Reserve meeting later this week adds another layer of significance. While no rate change is expected, investors will be parsing every word from Jerome Powell for clues about policy direction. Jacobsen expects the Fed to reaffirm its commitment to the 2% inflation target, with any nuance in messaging likely to influence market expectations for the rest of the year.

Meanwhile, broader market signals remain mixed. Gold has surged past the $5,000 level, driven largely by central bank buying, while the 10-year Treasury yield continues to hold above 4.2%. Jacobsen cautioned against assuming gold’s recent momentum will continue unchecked, emphasizing the importance of diversification and careful allocation, particularly when weighing corporate bonds against Treasuries.

As January draws to a close, the convergence of earnings results, Federal Reserve guidance, and sector rotation is setting the tone for the months ahead. While mega-cap earnings will dominate headlines, Jacobsen underscored that shifts in consumer confidence, business investment, and hiring intentions will ultimately play a decisive role in shaping economic growth in 2026. Investors who stay focused on those underlying trends will be better positioned to navigate what comes next.

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