Stocks Jump to Another Record but Reverse to the Flatline as Wall Street Awaits Powell, MAG 7: Jan. 28, 2026

The S&P 500 exceeded its pivotal 7k milestone this morning for the first time ever before retreating to its flatline as Wall Street awaited the January Fed decision, the subsequent Powell presser and the quarterlies from three of the Magnificent Seven juggernauts after the closing bell. Blockbuster overnight foreign earnings reports from ASML and SK Hynix dialed up enthusiasm about the artificial intelligence theme, arriving just hours prior to critical results from Microsoft, Meta and Tesla. But the cyclical trade is showing signs of fatigue with the Dow Jones Industrial and Russell 2000 benchmarks more than 1% and 3% off their respective records from last Thursday. Indeed, the Nasdaq 100 Index is the only domestic major firmly in the green at this moment, barely missing an all-time high in earlier trading, a breakthrough last marked in October. It’s an uneventful day for economic data; however, President Trump’s warning to Tehran to agree to a deal quickly is sending crude oil prices to a four-month high, as energy supplies could be compromised if Middle East geopolitical tensions escalate. The development is weighing on Treasuries modestly, which are lower across the curve, as fixed-income watchers raise inflation expectations in light of the uptick in relative uncertainty. Commodities are additionally catching bids from a weak greenback, which reached a four-year low yesterday, and the US commander in chief appeared satisfied with the depreciation, as a softer dollar boosts the White House’s onshoring ambitions while propelling the profitability of stateside corporates with globally diversified revenues. Gold is jumping and has breached $5,300 an ounce to a fresh peak and silver is gaining too, although copper and natural gas are pulling back. Elsewhere, investors are adding hedges to equity portfolios to brace for this afternoon’s events as volatility protection instruments see heavier premiums, crypto is mixed and forecast contracts are seeing interest.

Let’s Focus on Growth, Jobs, Prices

The White House’s pressure campaign on the Federal Reserve that seeks to imminently lower interest rates has shifted Wall Street’s concentration from the central bank’s opinions on growth, jobs and prices. But with Chair Powell’s term ending in May and just three meetings left under current leadership, attention is poised to increasingly turn back to economic fundamentals. However, independence and the road ahead are going to be topics that reporters ask about after the institution issues its statement, although the chief is likely to deflect questions that focus on the monetary policy authority’s recent engagements with the administration as well as inquires related to if he plans to stay on as governor until 2028. The meeting is geared up to offer views of the committee taking its time analyzing incoming data, because weakening payrolls against the backdrop of restrictive immigration amidst a reaccelerating cycle are creating a difficult dynamic to gauge, as traditional indicators lack the capacity to fully understand the historic discrepancy. Nonetheless, price pressures are meaningfully above target and it’s largely acceptable to adopt a wait-and-see posture to patiently watch which one of the dual risks begins to justify action. Still, the funds curve is pricing in almost two cuts by year end in non-consecutive fashion, with the first potentially arriving in June and the second in September or later. 

AI to Dominate Earnings Calls

This afternoon’s earnings results from Microsoft, Meta and Tesla will be dominated by artificial intelligence and how the modern technology is influencing spending plans and delivering growth to revenues and incomes. Top of mind will be whether there’s any bifurcation in momentum between semiconductor manufacturers, memory producers and end-user providers and the clues that the corresponding information provide about the state of the cycle. Investors will be analyzing these points after the bell, as significant capital expenditures paired with terrific profits are poised to be celebrated by Wall Street. But if big tech tells its shareholders that they need to wait further to see bottom-line buoyancy, stocks could suffer. Finally, there’s likely to be differences across the Magnificent Seven regarding AI prospects and which companies are monetizing more than others, and that too can lead to participants favoring a few names while neglecting their counterparts. 

International Roundup

Japan Treasury Auction Eases Jitters

Japan’s auction of 40-year bonds helped ease concerns of rising yields with demand for the securities hitting the strongest level since March. Bond yields sank 2 basis points to 3.915%. Yields for the long-duration debt hit a record high of 4.215% last week in response to the country’s prime minister igniting concerns about the country’s fiscal well-being with her stimulative proposals featuring spending increased and tax reductions.

Australia CPI Sets Stage for Rate Hike

Australia’s Consumer Price Index posted a 3.8% year-over-year (y/y) climb in December, slightly hotter than the 3.55% estimate, increasing speculation that the country’s central bank will hike its 3.6% key interest rate during its Feb. 2-3 meeting. The headline result was pushed higher by housing, up 5.5%, the food and non-alcoholic beverages category with a 3.4% ascent, and the recreation and culture group, which rose 4.4% The trimmed mean CPI, which excludes certain items with volatile pricing, was less severe, climbing 3.3% y/y after rising 3.0% in November.

Bank of Canada Holds Key Rate

The Bank of Canada held its benchmark interest rate at 2.25% this morning, a decision that was widely expected by economists. The decision comes as the country struggles with uncertainty regarding both trade with the US and the outlook for the economy. When announcing the decision, the bank maintained that the current rate is appropriate based on current conditions. In a press conference, furthermore, Governor Tiff Macklem suggested either a cut or hike is possible going forward due to high levels of uncertainty making it difficult to forecast future policy changes.