From the desks of Stanley Katz & Lauren Madera
BUNDLE UP. KEEP WARM. STAY SAFE.
Markets retreated again slightly this week (DJIA: -0.70%, S&P 500: -0.42%, Nasdaq: -0.12%), despite the roller coaster ride. The most significant earnings news came from Intel, where shares plunged 17% on Friday—the worst day since August 2024. CEO Lip-Bu Tan warned the company cannot meet full demand for its products and production efficiency remains below targets. Specifically, the foundry business—which creates chips for other companies—faces delays. Intel’s stumble illustrates execution risks within the AI narrative, a concern that echoed through the World Economic Forum Annual Meeting in Davos this week. Record participation from over 60 heads of state and 830 CEOs underscored both optimism about dealmaking and deep anxiety about geopolitical fragmentation. Time will tell where this paradox leads.
J.P. Morgan’s Q1 2026 Guide to the Markets projects a “2-0-2-4” year—2% economic growth, no recession, inflation falling to 2% by year-end, and unemployment declining to 4%. Fourth-quarter GDP growth came in weak, but J.P. Morgan expects a rebound to roughly 3% annualized in early 2026 as income tax refunds support consumer spending; AI infrastructure investment continues; and solid spending from upper-income households persists following three years of stock market gains. In their opinion, inflation and growth risks intensify later in the year as we realize the impact of tariffs and reduced immigration. All in, J.P. Morgan adheres to their reasonably upbeat base case supported by solid corporate profit margins and continued productivity gains.
The earnings season reinforces this cautiously optimistic view—though with caveats. Among the 51 S&P 500 companies that have released Q4 results, Zacks reports 88.2% exceeded analyst expectations with total earnings up 17.2% year-over-year. Finance sector companies have delivered particularly strong results (earnings up 13.9%), with management commentary emphasizing stable credit quality and positive loan demand despite uncertainty around tariffs and regulation. Critically, earnings strength is not narrow: all 16 Zacks sectors are expected to achieve positive earnings growth in 2026—the first time since 2018. While Technology dominates with 36% of projected forward earnings (i.e., expected earnings over the coming quarters), cyclical sectors (like Autos, Basic Materials, Industrials, and Aerospace) are positioned for double-digit growth too, supported by AI infrastructure buildout and energy transition investment. Perhaps, productivity gains and wage moderation may sustain earnings momentum even as economic growth moderates later in the year?
Below are links to a number of third-party research reports that we have read and analyzed over the past week. We hope you will find the information interesting, useful, and worthwhile.
J.P. Morgan Asset Management:
Zacks:
Schwab:
BlackRock:
Capital Group:
Stanley Katz & Lauren Madera, Financial Advisors
ClientFirst Financial Strategies, Inc.
937-293-5500
Source for weekly stock market returns: Barron’s.
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