Shutdown, Tariffs Return to Focus as Stocks Waver

Published as of: January 26, 2026, 9:12 a.m. ET

(Monday market open) The old week ended with fading tariff and government shutdown fears. Monday opened with both back in the headlines after President Trump threatened 100% tariffs on Canada and Democrats announced opposition to Department of Homeland Security (DHS) funding— a move that could trigger a partial government shutdown Friday. Volatility and metals prices climbed early today, the dollar fell, and U.S. stock indexes treaded water.

Even without those weekend events, this would be among the busiest periods of the quarter, featuring a Federal Reserve meeting, several Treasury auctions, and earnings from mega caps over coming days. A 2-year Treasury note auction with results due later today followed by a 5-year auction tomorrow could reveal how eager investors are to buy U.S. debt following last Tuesday's "sell America" plunge in markets and today's drop in the dollar. "I think it's an exaggeration to say this is a 'sell U.S.' kind of market in the long run," said Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research, or SCFR. "It's just really hard to replace U.S. Treasuries and U.S. dollars in a global financial system. But people are going into things like gold as an alternative."

On Friday, major indexes finished mixed amid softness in banks but strength in several Magnificent Seven names, including Nvidia (NVDA). The S&P 500 index ended down for the second straight week. This week features earnings from about 90 S&P 500 companies including Boeing (BA), Caterpillar (CAT), Starbucks (SBUX), and General Motors (GM). By the end of last week, 13% of S&P 500 companies had reported with 75% beating analysts' estimates for earnings per share and 69% surpassing revenue expectations, according to FactSet.

1. Partial shutdown increasingly likely: When Congress left town last Thursday, government funding was all but finished. The House had passed the last six appropriations bills and the Senate was poised to this week, ensuring there wouldn't be a second government shutdown when funding expires on January 30. But the dynamics changed dramatically with the shooting of a protestor in Minneapolis on Saturday. Senate Democrats are now expected to block passage of the six-bill funding package because it includes funding for the DHS and Democrats want some restrictions on Immigration and Customs Enforcement (ICE) agents as part of a revised bill. "But even if a deal is worked out this week to, for example, have the Senate pass the other five bills (which include funding for the Pentagon, the Labor Department, and a half-dozen other Cabinet agencies) separately from the Homeland Security bill, the revised package would have to go back to the House," noted Michael Townsend, managing director of legislative and regulatory affairs at Schwab. "But the House is in recess until February 2. That makes a partial government shutdown at the end of this week increasingly likely."
    
2. Rate cut unlikely, but does it matter? Though investors seem unlikely to get a rate cut this week and odds of more than two cuts this year recently fell, it's unclear how much easing might be needed. Last week's strong gross domestic product (GDP) print, the Atlanta Fed's updated "Nowcast" for fourth quarter GDP of 5.4%, recent retail sales reports, and strong financial sector earnings suggest Fed policy isn't particularly restrictive, even with a current target rate well above the zero level that persisted through much of the post-Great Recession period and again during the pandemic. "Although Wall Street is conditioned to habitually focus on Fed policy, inflationary trends, and yields, given the strong economic data points recently, I'm not sure whether any rate cuts in 2026 matter to investors," said Nathan Peterson, director of derivatives research and strategy at SCFR. "Where is the evidence that Fed policy is restrictive? Yes, there have been softening trends in the labor market, but it's not being driven by economic growth concerns."
    
3. New options expirations available on Schwab for high-volume securities: Starting today, Schwab clients who trade options can take advantage of Nasdaq's new Monday and Wednesday expirations of options contracts that include many top-volume securities. For the current quarter, available securities include Tesla (TSLA), Nvidia (NVDA), Apple (AAPL), Amazon (AMZN), Meta Platforms (META), Broadcom (AVGO), Alphabet (GOOGL), and Microsoft (MSFT), along with select ETFs. Schwab will offer all of them on day one and will expand the list in the future as Nasdaq adds more. If you're new to options and you don't quite understand all the terminology and logistics, expiration can be a time of peril. Here are a few things you need to know to avoid potential pitfalls and better understand the ins and outs of expiration day.

• Gold (/GC) climbed to new record highs early Monday and silver mounted another rally as geopolitical tensions simmered over the weekend. There are concerns over trade relations between the U.S. and its allies, Fed independence, inflation, and a falling dollar, all of which helped the metals early today. Gold is now above $5,000 an ounce for the first time ever.
   
• The U.S. Dollar Index ($DXY) fell 0.3% early today and briefly touched four-month lows below 97. It had climbed as high as 100 in late November, but the "sell America" trade appeared to hit it last week and again Monday. The soft dollar today also could reflect concerns about the falling Japanese yen, Bloomberg reported, with speculation that the U.S. might unite with Japan to support the yen, pushing the dollar down more.
   
• U.S. Rare Earth (USAR) powered 20% higher in early trading Monday and other mining stocks also rose on news that USAR entered into a non-binding letter of intent with the U.S. Department of Commerce for up to $1.6 billion in Chips and Science Act of 2022 (CHIPS) support. USAR also raised $1.5 billion in private capital. Shares rose 9% Friday.
   
• Bitcoin (/BTC) dropped 1.9% in early trading Monday, possibly hurt by investors moving assets into perceived "safer" areas like gold, though no investment is truly safe.
   
• Energy stocks including Baker Hughes (BKR), Halliburton (HAL), Valero Energy (VLO), and Exxon Mobil (XOM) all added 1% or more ahead of the open amid rising tensions between the U.S. and Iran and in the aftermath of the weekend U.S. snowstorm that could hurt domestic production temporarily.
   
• CoreWeave (CRWV) jumped 10% in early trading after Nvidia and CoreWeave announced they'd expanded their relationship to enable CoreWeave to accelerate the buildout of more than five gigawatts of AI factories by 2030.
   
• In early data today, November durable good orders rose 5.3% month-over-month following a 2.6% drop in October. Excluding transportation, durable orders climbed 0.5%, better than the 0.3% Briefing.com consensus.
   
• Intel (INTC) tumbled 17% Friday after disappointing guidance. Intel said it's navigating industry-wide supply shortages it expects to bottom out in the first quarter.
   
• Nvidia rose 1.6% Friday following a Bloomberg report that China's government advised tech firms there to prepare orders for Nvidia's H200 chip. However, shares of Nvidia and some of the other large AI-related firms inched lower this morning. The chip sector has generally climbed early this year after struggles in late 2025.
   
• Boeing was flat ahead of its earnings report early Tuesday but up around 10% year-to-date. Shares have rallied thanks to growing orders and hopes for a return to profitability in coming quarters. Analysts expect solid annual sales growth from a year ago in the quarter Boeing reports tomorrow.
   
• General Motors shares were little changed today before reporting tomorrow morning. Last time out, the automaker impressed, and analysts expect double-digit top-line growth in the quarter it's reporting Tuesday. GM posted a 5.5% annual sales increase in 2025.
   
• The Cboe Volatility Index (VIX) faded last week from Tuesday's highs as the S&P 500 index recovered some, but not all, of its losses from that day. "Although the VIX has pulled back from 20 to 15 over the past four days, I'm not convinced that we are done with volatility," Schwab's Peterson said Friday. Indeed, VIX rose 4% early Monday to 16.77.

Traditionally, the Dow Jones Transport Index ($DJT—candlesticks) and the small-cap Russell 2000^® Index (RUT—purple line) have been seen as canaries in the coal mine for the broader market, and both are up substantially more in the last three months than the S&P 500 index (SPX—blue line). However, both transports and small caps ran into trouble Friday. Their paths from here might be worth watching for clues about the underlying economy.