A Short Week, Long on Risk

👋Hello and welcome to a new trading week! 🌅 

Here’s what we’re watching during this holiday-shortened week:

• Short trading week, but packed with inflation data, Davos headlines, key earnings, and spiking volatility.

• Tariff escalation shocks markets, amplifying seasonal volatility and threatening a near-term S&P trend reversal.

• Trump’s upcoming Davos speech puts housing reform and Fed tensions squarely in focus.

• Netflix, Intel, airlines, and industrials headline a market-moving earnings slate.

Let’s dive in. 💦💦💦

💵What’s the market pricing in for the week ahead?

It’s a short week, but with a big agenda. Markets took Monday off for Martin Luther King Jr. Day, but Wall Street doesn’t get much of a breather after that as Davos is in full swing and earnings season keeps rolling.

The World Economic Forum opens in Switzerland just as investors digest delayed U.S. economic data, including October and November PCE inflation and the final read on Q3 GDP.

After his announcement in a Truth Social post that eight NATO members’ U.S. imports will face escalating tariffs sent stock futures tumbling overnight, President Trump is set to speak Wednesday, with housing affordability expected to be front and center—alongside proposals targeting institutional homebuyers and mortgage-market intervention.

Meanwhile, policymakers are watching inflation closely ahead of next week’s Fed meeting, even as the Supreme Court hears arguments tied to Trump’s effort to remove Fed Governor Lisa Cook.

Click here 👈 to learn more about our charts.

📈It’s a tech-and-transportation-heavy earnings slate this week

Netflix and Intel headline the week, with Netflix’s results potentially shedding light on a possible Warner Bros. Discovery deal, and Intel riding optimism around its AI PC chips and fresh investment support.

Airlines and industrials also step into the spotlight, with United, GE Aerospace, 3M, Travelers, and Johnson & Johnson all reporting as investors gauge demand, margins, and guidance across the economy.

🤔 Which companies are poised to possibly over- or underreact to earnings this week?

The largest company to report earnings this week, Johnson & Johnson, has a history of trading very close to the market makers’ expected range during the trading session immediately following earnings (keep reading below the next table for more details on how this is calculated).

Of the 20 largest companies reporting earnings this week, 3M has the strongest tendency to overshoot the implied price range immediately following earnings.

On the other side of the coin, of the top 20 companies reporting this week, ICICI Bank shows the greatest likelihood of staying inside its post-earnings expected range (keep reading below the next table for more details).

👇 Below is a look at this week’s biggest earnings reports, sorted by market cap:

Markets set to absorb another Oval Office jab

In a Truth Social post on Saturday, President Trump announced that imports from eight NATO members will face escalating U.S. tariffs “until such time as a Deal is reached for the Complete and Total purchase of Greenland.” The tariffs are set to start at 10% on Feb. 1 and climb to 25% by June 1, according to Trump. European leaders were quick to call the move “unacceptable.”

Markets are taking note. U.S. equity index futures are sharply lower this morning, piling pressure onto an S&P 500 that has already entered a historically choppy stretch of the calendar.

That weakness—highlighted by the red arrow in the chart below—began right on the eighth trading day of the month, a timing that lines up neatly with seasonal patterns. If the S&P 500 cash index (SPX) fails to close above 6,858.56 at any point this week, it would trigger a technical shift strong enough to flip the index’s previously bullish trend, increasing the odds that January’s back half follows its usual script of underperformance.

This week, the energy (XLE) sector is expected to be the most volatility sector, with technology (XLK) and consumer cyclicals sectors registering the next highest levels of implied volatility.

Conversely, the health care (XLV), consumer staples (XLP), and real estate (XLRE) sectors are expected to have the lowest volatility.

Tuesday

• Top Earnings: Netflix, 3M, U.S. Bancorp, Fastenal, D.R. Horton, United Airlines, Fifth Third Bancorp, Interactive Brokers

  Wednesday

• President Trump delivers remarks at the Davos World Economic Forum

• Supreme Court oral arguments in Fed Governor Lisa Cook case

• Construction spending, Pending home sales

• Top Earnings: Johnson & Johnson, Charles Schwab, Truist Financial, Travelers Companies, Halliburton, Citizens Financial Group

  Thursday

• Personal Consumption Expenditures (PCE) price index

• Gross domestic product - final reading (Q3), Initial jobless claims

• Top Earnings: GE Aerospace, Procter & Gamble, Abbott Laboratories, Intel, Intuitive Surgical, Capital One Financial, CSX

  Friday

• WEF in Davos concludes

• Consumer sentiment - final

• S&P flash U.S. PMI

• Top Earnings: Ericsson, First Citizen, Booz Allen Hamilton

The sharp drop in volatility that followed the Supreme Court’s paused tariff decision on Jan. 9 proved fleeting, with the Cboe Volatility Index (VIX) rebounding to fresh multi-week highs last week.

Aside from Wednesday’s session, the S&P 500 spent most of last week trading within its typical daily ranges. But the VIX’s persistent climb has been a tell: investors have been quietly adding protection even as stocks sit near all-time highs.

Now, with volatility pushing above long-term averages following this weekend’s tariff escalation, the odds are rising that the S&P 500 breaks outside its normal daily ranges in the days ahead. 

📋Here’s a curated list of top value-added insights that uncover what’s happening way beyond the usual financial media headlines.