The US stock market is about to enter a "super storm week." First, the Federal Reserve will hold its policy meeting next week (January 27-28) and announce its interest rate decision on the following Thursday (January 29). The market widely expects the Fed to pause interest rate cuts at this meeting. According to CME's "FedWatch Tool," the probability of a 25-basis-point rate cut by the Fed in January is currently only 4.4%, while the likelihood of rates remaining unchanged stands at 95.6%.
Second, the US stock market will usher in a "super earnings week" next week, with tech giants like Apple, Microsoft, Meta, and Tesla set to release their financial reports in quick succession. Some analysts point out that the most critical theme of this earnings season is whether tech giants are truly beginning to benefit from AI-related investments and what their future capital expenditure plans entail. The upcoming Federal Reserve policy meeting is set to be the main focus. Over the coming week, the focus of the US stock market will shift back to macroeconomics, monetary policy, and corporate earnings, with the Fed's policy meeting expected to be the biggest highlight. The market generally anticipates that the Fed will halt its rate-cutting cycle at this meeting. Having already cut rates three times consecutively in 2025, policymakers now need to balance the scope for future adjustments against persistent inflationary pressures and resilient economic growth. Investors will closely watch the number of dissenting votes, the accompanying statement, and commentary to assess the timing and pace of any future rate cuts.
HSBC economists stated in a report that they expect Fed Chair Powell to emphasize that future interest rate adjustments will depend on the evolution of economic data. A Reuters survey of 100 economists found that all respondents expect the Fed to keep the benchmark interest rate within the 3.50%-3.75% range at its January 27-28 meeting. More crucially, approximately 58% of the surveyed economists forecast that rates will remain unchanged throughout the first quarter, a significant shift from last month when most had anticipated at least one rate cut by March.
According to LSEG StarMine calculations, Jeremy Schwartz, Senior US Economist at Nomura, was one of last year's most accurate forecasting analysts. He suggested that while the surface-level economic outlook implies the Fed should maintain a wait-and-see approach, potentially even putting rate hikes back on the table later this year or next year, in practical terms, the Fed is likely to remain "on hold" until Powell's term concludes in May. Jeremy Schwartz expects that after the new Fed leadership takes office, they might manage to push through another 50 basis points of rate cuts later this year.
Beyond economic data, political factors are increasingly influencing the backdrop for Fed decisions. Currently, there are significant divisions among Fed policymakers regarding the outlook, and external pressures remain unabated. In addition to criminal charges against Powell, former President Trump's attempt to remove Fed Governor Lisa Cook is awaiting a Supreme Court hearing. Treasury Secretary Besant recently indicated that Trump could decide on the next Fed Chair nominee as early as next week. Bernard Yaros, Chief US Economist at Oxford Economics, warned that the selection process for the next chair faces unprecedented hurdles due to the ongoing criminal investigation. He believes Trump will likely find it difficult to fill Fed vacancies entirely with candidates inclined towards rate cuts. This layer of political uncertainty has become a risk variable that investors cannot ignore when assessing the future path of interest rates.
Simultaneously, the US stock market kicks off its "super earnings week," with approximately one-fifth of S&P 500 constituents, including members of the "Magnificent Seven" like Apple, Microsoft, Meta, and Tesla, set to report their latest earnings next week. Specifically, Microsoft, Meta, and Tesla will report after the market closes on Wednesday, while Apple and Amazon will wrap up the week reporting after Thursday's close. Analysis indicates the key theme of this earnings season is whether tech giants are truly starting to reap benefits from their AI-related investments. Towards the end of 2025, market concerns emerged about whether massive capital expenditures directed towards data centers and other infrastructure would yield returns, which had previously weighed on US tech giants and other AI-related stocks.
Goldman Sachs predicts that Apple's revenue for the first quarter of fiscal 2026 will reach $137.4 billion, an 11% year-over-year increase. The iPhone business is expected to be the primary growth driver, with projected revenue contributions of $78 billion, up 13% year-over-year. Goldman Sachs also forecasts that Apple's earnings per share for Q1 fiscal 2026 will be $2.66, aligning with market consensus, and that gross margin will remain at a healthy 47.7%.
For Tesla, investor focus is shifting away from traditional financial metrics towards advancements in cutting-edge technologies like Robotaxi, unsupervised autonomous driving, the Optimus humanoid robot, and the AI5 chip. According to a recent Morgan Stanley research report, incremental updates on these technologies will likely dictate the stock price reaction more than conventional delivery numbers or margin data. A team led by Morgan Stanley analyst Andrew S. Percoco noted significant divergence in market expectations for Tesla's key 2026 financial metrics. The firm expects Tesla's 2026 deliveries to be 1.6 million vehicles, 9% below the general market expectation and representing a 2.5% year-over-year decline. Morgan Stanley anticipates that Tesla will provide updates during its earnings call on the progress of its AI5 chip design and how its chip projects and computing power investments are expected to evolve over time, including projects like AI6+ and Dojo.
Additionally, global memory chip giants Samsung Electronics and SK Hynix are also scheduled to report earnings next week, where AI technology and the semiconductor cycle are expected to be core points of focus.
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