Earnings Triple-Play, Fed Ahead as Rally Resumes

Published as of: January 28, 2026, 9:12 a.m. ET

(Wednesday market open) A triple-header awaits as Microsoft (MSFT), Meta Platforms (META), and Tesla (TSLA) report after the close, keeping focus on data centers, the cloud, and AI spending. Hopes for solid results helped the S&P 500 Index surge to a new record high yesterday and climb again early today, threatening 7,000 for the first time. Collectively, Magnificent Seven profits are projected to grow by nearly 17%, likely making this the most important stretch of earnings season so far. Strong numbers that don't lift share prices could signal fading enthusiasm for AI leaders.

The earnings bonanza comes after the Federal Reserve delivers its rate decision at 2 p.m. ET followed by Chairman Jerome Powell's press conference. Though no rate change is expected, any updates to the statement will be scrutinized, and so will Powell's tone. This meeting includes new voters and might see dissents in both directions. "The real drama is likely to be at the press conference where Powell will no doubt be questioned about the administration's actions against him and Fed Governor Lisa Cook," said Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research (SCFR). "The attacks on Fed members raises the issue of whether policy makers can continue to do their jobs without political interference. How Powell responds to those questions will probably be the highlight of the day."

On Tuesday, info tech led all sectors, and tech swung the baton again this morning amid chip strength. Treasury yields were stable heading into the Fed meeting.  "We believe that given all the uncertainty, it will translate to less downside for longer-term yields," said Cooper Howard, director, fixed income strategy at SCFR. "Concerns over the Japanese yen, political instability, and the composition of the Fed, just to highlight a few issues, will all likely translate into an elevated term premium which should keep yields elevated."

1. Anticipation builds on Powell successor: For the first time in eight years, the Fed will have a new chairman when Powell's term ends in May. As the Fed met today, there were hints that the White House might announce his replacement as soon as this week. At this point, Rick Reider, chief investment officer for global fixed income at BlackRock (BLK), appears to have gained momentum as Powell's possible replacement. "Rieder is seen by some in Washington as having the smoothest path to confirmation in the Senate," said Michael Townsend, managing director of legislative and regulatory affairs at Schwab. "Kevin Warsh, a former Fed governor, is the other candidate who appears to be under serious consideration." Rieder's views on lower interest rates and housing affordability align with President Trump's priorities, Barron's reported this week. In his appearances on financial news networks, Rieder has said that the Fed needs to find new ways of looking at the economy that account for technology-related productivity gains. Of course, Rieder or any other nominee needs Senate approval, and Fed independence concerns could dominate the process.
    
2. AI spending in focus as mega caps report: A few quarters ago, investors drilled in on quarterly cloud growth for Microsoft, and it's still an important metric. Overshadowing that to some degree now is the amount of spending that the AI contingent, including Meta and Microsoft, plans for data centers, which could have implications for their own margins as well as the health of chip companies. Last quarter, Meta concerned investors when it raised its estimate for total 2025 expenses and said  dollar growth in capital expenditures would be "notably larger" in 2026 than in 2025. Meta said the growth in spending is driven primarily by infrastructure costs, including incremental cloud expenses and depreciation, along with employee compensation costs. If Meta and other firms announce more spending this time around, it could be interesting to see how the market reacts after Meta shares slumped on similar news last time. One question for Meta is whether it's beginning to generate meaningful revenue from all the AI initiatives, while investors will likely watch Microsoft for Azure cloud growth, updates on data center spending, and any commentary around OpenAI's financial position.
    
3. Layoffs on rise: Amazon (AMZN) became the latest large firm to announce significant layoffs, saying it plans to cut 16,000 jobs amid "organizational changes." The company says it's trying to strengthen itself by "reducing layers" and removing bureaucracy. In a related development, UPS (UPS) said it's eliminating another 30,000 operational jobs as it shifts away from its reliance on Amazon and steers toward what it believes are more profitable deliveries. The company cut 48,000 jobs last year and says the new cuts will mostly be through attrition. Overseas, semiconductor equipment firm ASML (ASML) announced job cuts today. Doubtless, the Fed has its eye on things after a 58% increase in U.S. job cuts last year from 2024, according to Challenger, Gray & Christmas.  Employers also announced the lowest number of new hires last year since 2010. All this might play into recent soft consumer sentiment and confidence.

• Nvidia (NVDA) rose 2% early on news that China's government had given several domestic companies permission to buy Nvidia's H200 AI chips. This also could be behind the strength at Taiwan Semiconductor Manufacturing (TSM) and Advanced Micro Devices (AMD) today, CNBC reported.
   
• ASML (ASML) popped more than 5% early today after the semiconductor equipment maker reported better-than-expected quarterly sales and impressed with its guidance. The company had a record quarter for orders, a possible sign of solid demand from the AI buildout.
   
• Texas Instruments (TXN) climbed 7% this morning despite earnings per share coming in slightly below consensus and revenue roughly matching estimates. Investors seemed enthused over strong guidance for the current quarter.
   
• Strong ASML and Texas Instruments earnings combined with the Nvidia news and anticipation of heavy spending by mega caps gave the rest of the chip sector and AI-related names an early boost Wednesday. Shares of CoreWeave (CRWV), Western Digital (WDC), Intel (INTC), and Micron (MU)all climbed 2% or more ahead of the open.
   
• Seagate Technology (STX), a data storage firm, climbed 10% before the open on solid earnings as it cited strong AI demand.
   
• Starbucks (SBUX) perked up more than 5% before the bell. Although the coffee chain missed analysts' average estimate for fiscal first-quarter earnings, same-store sales climbed and transactions grew. Revenue slightly exceeded Wall Street's thinking as U.S. same-store sales (at stores open a year or more) grew 4% on strong holiday demand.
   
• GE Vernova (GEV) tumbled 3.3% in early trading despite solid earnings and guidance, along with what looked like strong new orders. The issue some investors have might be with earnings before interest, taxes, depreciation, and amortization, or EBITDA, Barron's noted, saying it looked slightly light.
   
• Tesla shares barely moved ahead of this afternoon's earnings report. AI spending will be under scrutiny when it reports. Wall Street generally punished companies last time out for raising their spending plans. Tesla also faces questions over last quarter's lower production and EV competition from China, as well as the roll-out of its Robo-taxis.
   
• Applied Materials (AMAT) climbed 4% in early trading after being upgraded to outperform from neutral by Mizuho. The chip fabrication equipment supplier should benefit from accelerating spending in the U.S., Taiwan, and Japan, the analyst said.
   
• AT&T (T) rose nearly 4% after earnings and revenue topped analysts' estimates.
   
• Gold (/GC) leaped another 3.8% this morning to new all-time highs above $5,300 an ounce. Silver (/SI) climbed 7.5%. The metals rally hasn't slowed all month amid geopolitical instability.
   
• The 10-year Treasury note yield (TNX:CGI) climbed one basis point to 4.22% Tuesday and added a bit more early today following relatively weak demand for a $70 billion five-year Treasury note auction after a strong 2-year auction the day before. Earlier, yields slipped on yesterday's weak consumer confidence report for January that showed headline confidence at the lowest levels in more than a decade.
   
• The U.S. dollar index ($DXY) cratered to its lowest level in more than four years Tuesday. The dollar has been hurt by U.S. debt, tariffs, rate cuts, and the "debasement trade" in which investors exit U.S. assets. The dollar slipped again early today after President Trump said the currency is "doing great," media reports said. Market participants read this as a sign that the administration won't take measures to support the dollar.
   
• The weak dollar, tensions with Iran, and wintry U.S. weather combined to send crude oil (/CL) surging another 1% this morning to the highest since late September.
   
• Bitcoin (/BTC) inched higher early Wednesday and has been on a recovery path this week but remains well below its January highs. Technically, the $90,000 level appears difficult to hold, and the metals rally may be stealing crypto's thunder.

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The U.S Dollar Index ($DXY—candlesticks) took out its September low yesterday and plunged to levels last seen in early 2022, as this monthly five-year chart shows. A lot has changed since then, especially the U.S. 10-year Treasury note yield (TNX:CGI—purple line). When the dollar last regularly traded at these levels, the Fed had rates at zero coming out of the pandemic and the 10-year yield was well under 2%. A higher yield, now above 4.2%, is typically bullish for the dollar, and has been much of the last few years. But it seems it can no longer protect the dollar from geopolitical tensions, tariffs, worries about foreigners pulling their money from U.S. assets, the rally in metals, and rising U.S. debt.

Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.

January 29: November factory orders and expected earnings from Mastercard (MA), Caterpillar (CAT), SAP SE (SAP), Lockheed Martin (LMT), Altria (MO), Comcast (CMCSA), Apple (AAPL), Visa (V), Western Digital (WDC), and Sandisk (SNDK).
January 30: Expected earnings from Exxon Mobil (XOM), Chevron (CVX), American Express (AXP), and Verizon (VZ).
February 2: December construction spending, January ISM Manufacturing Index and expected earnings from Walt Disney (DIS), IDEXX Laboratories (IDXX), and Palantir (PLTR).
February 3: December job openings and labor turnover survey (JOLTS), and expected earnings from Merck (MRK), PepsiCo (PEP), Pfizer (PFE), Eaton (ETN), Advanced Micro Devices (AMD), Amgen (AMGN), and Chubb (CB).
February 4: ADP January employment change, December factory orders, January ISM Services PMI^®, and expected earnings from Eli Lilly (LLY), AbbVie (ABBV), Novartis (NVS), Novo Nordisk (NVO), Uber Technologies (UBER), Alphabet (GOOGL), Qualcomm (QCOM), and Arm Holdings (ARM).