The Stock Market This Week: President Trump's Tariffs, the Fed's Interest Rate Decision, and Big Tech Earnings

The U.S. stock market has whipsawed higher and lower through the first weeks of 2026. The benchmark S&P 500 (SNPINDEX: ^GSPC) had increased 2% before President Trump threatened new tariffs on eight European countries as part of his pressure campaign to purchase Greenland. Investors sold the news and the index fell more than 2%.

That volatility could persist this week. Not only because President Trump over the weekend threatened an additional 100% tariff on Canadian imports, but also because the Federal Reserve will make a decision about interest rates and four "Magnificent Seven" companies -- Tesla (NASDAQ: TSLA), Microsoft (NASDAQ: MSFT), Meta Platforms (NASDAQ: META), and Apple (NASDAQ: AAPL) -- will report earnings.

Here are the important details.

Image source: Getty Images.

The Federal Reserve will make a decision about interest rates this week

The Federal Open Market Committee (FOMC), the 12-member group responsible for setting interest rates, will meet to discuss economic and financial conditions this week. The two-day event concludes on Wednesday, Jan. 28. The market expects the FOMC to hold the federal funds rate steady at 3.5% to 3.75%. The odds of a 25-basis-point cut are just 4%, according to CME Group's FedWatch tool.

President Trump's tariffs have simultaneously made inflation worse and weakened the jobs market. The FOMC -- which raises rates to curb inflation and lowers rates to stimulate the jobs market -- chose to prioritize the jobs market. Policymakers cut rates three times last year. However, recent economic data suggests the jobs market may be more resilient than initially feared.

Specifically, while hiring undoubtedly stalled in 2025 -- slowing more sharply than at any point since the Great Recession (excluding the pandemic in 2020) -- the unemployment rate fell to 4.4% in December, a modest improvement from 4.5% in November. To that end, it makes sense that Fed official would hold rates steady as they await more economic data.

Four "Magnificent Seven" companies report earnings this week

Four members of the "Magnificent Seven" will announce earnings this week. Reports are due from Tesla, Microsoft, and Meta Platforms on Wednesday, Jan. 28. And a report is due from Apple on Thursday, Jan. 29. Here's what Wall Street anticipates:

Tesla: In the fourth quarter, vehicle production dropped 5% and deliveries dropped 16% as the company continued to lose market share in electric cars around the world. Wall Street expects revenue to drop 3% to $24.9 billion and non-GAAP earnings to drop 45% to $0.40 per diluted share. The market will probably focus more on what CEO Elon Musk says about physical artificial intelligence (AI) initiatives, meaning autonomous cars and robots.

Microsoft: Wall Street expects revenue to increase 15% to $80.3 billion and non-GAAP earnings to increase 20% to $3.86 per diluted share. The market will likely focus on results in the cloud computing unit Azure, where revenue growth has accelerated in three straight quarters, reaching 40% in the September quarter. Investors will also pay attention to what CEO Satya Nadella says about adoption of generative AI copilots in its software business.

Meta Platforms: Wall Street expects revenue to increase 21% to $58 billion and non-GAAP earnings to increase 3% to $8.23 per diluted share. Meta's investments in AI have increased engagement and advertising conversion rates across its social media platforms. Investors will look for that trend to continue, especially because the company plans to significantly increase capital expenditures in 2026.

Apple: Wall Street expects revenue to increase 11% to $138 billion and GAAP earnings to increase 11% to $2.67 per diluted share. The market will focus on iPhones sales (the 17 series was release in September) and services revenue. Also, Apple trails other big tech companies in terms of AI innovation, so investors will look for updates on that topic.

Here's the big picture: The stock market will likely be volatile this week. Trump is once again threatening higher tariffs, a move that has become the president's default response to any situation that displeases him, and four big technology companies (which account for about 16% of the S&P 500) will report earnings.

No matter which way the stock market breaks this week, investors should focus on building long-term wealth rather than navigating short-term volatility. That means hold your high-conviction stocks through turbulent times and avoid overvalued FOMO (fear of missing out) trades.

Trevor Jennewine has positions in Tesla. The Motley Fool has positions in and recommends Apple, Meta Platforms, Microsoft, and Tesla. The Motley Fool recommends CME Group and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.