After a losing week fueled by rising geopolitical tensions, Wall Street is heading into a potentially turbulent stretch as investors prepare for a packed week of market-moving developments.
Over the weekend, President Donald Trump threatened to impose a 100% tariff on goods entering the United States from Canada if the country were to strike a trade deal with China. In response, Canadian Prime Minister Mark Carney said his government has “no intention” of pursuing a free-trade agreement with Beijing.
This week also marks a pivotal stretch for earnings season, with more than 90 S&P 500 companies set to report quarterly results. That slate includes four members of the “Magnificent Seven” megacap group including Apple, Microsoft, Meta, and Tesla. Earnings season has been strong so far, with investors hoping that momentum carries into the coming days. One of the central questions this season is whether companies are beginning to see tangible returns from their investments in artificial intelligence.
Coming off a third straight year of double-digit gains, the S&P 500 is up about 1% to start 2026.
On Wednesday, the Federal Reserve will announce its first policy decision of the new year. Policymakers are expected to leave the benchmark interest rate unchanged in the 3.50% to 3.75% range, with a rate cut viewed as unlikely. Instead, investors will be focused on any signals regarding the timing of future rate cuts. While no new economic or policy projections are scheduled, markets currently expect the Fed to pause further rate cuts until June.
Gold prices climbed Monday as investors moved toward safe-haven assets amid mounting political and fiscal uncertainty, pushing the metal to a new all-time high above $5,100 per ounce.
Investors will also be watching ongoing political turmoil in Washington, where the threat of another government shutdown has emerged amid a standoff over federal spending. Several Democratic senators have said they will not support a roughly $1.2 trillion funding package if it includes full funding for the Department of Homeland Security. This comes amid outrage over a fatal shooting in Minneapolis over the weekend involving federal immigration agents.
Leaders of several major Minnesota-based companies, including 3M, Cargill and UnitedHealth, called for an “immediate deescalation” of tensions in the state. More than 60 CEOs signed a letter urging state, local and federal officials to work together to find meaningful solutions.
Taken together, the convergence of geopolitical risk, earnings reports, monetary policy decisions, and political uncertainty sets the stage for a potentially volatile week ahead for financial markets.
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