New York morning: Trump's rhetoric will set the tone for trading

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The determining factor for investor sentiment in the upcoming session will be the strengthening of foreign trade risks and geopolitical tensions, which may gain additional momentum. US President Donald Trump will speak at the international economic forum in Davos today, January 21. Donald Trump's speech, according to some media, will be devoted to the topic of Greenland. Possible signals regarding new duties against European countries can lead to spikes in volatility, primarily in sectors sensitive to the topic of international trade. The rally in gold continues: today it rose another 2%. However, if Trump's rhetoric turns out to be softer than expected, a quick fixation of positions in the precious metal is likely.

This Wednesday, January 21, the U.S. Supreme Court will consider the legality of the resignation by the head of the White House of Lisa Cook, a member of the Board of Governors of the Federal Reserve System. This legal plot will not change the medium-term benchmarks for the dynamics of rates, but will increase the likelihood of short-term sharp movements, especially since public comments from representatives of the monetary authorities before the FOMC meeting, which will be held next week, are limited.

Discussion of the Fed's independence increases nervousness in the markets and is superimposed on the growth of yields on Japanese government bonds, which further reduces demand for U.S. debt securities. The auction on placement of 20-year trejeris, scheduled for today, will be an important test of the stability of demand.

Before the main session opens , Johnson & Johnson (JNJ), Charles Schwab (SCHW), Travelers (TRV), Prologis (PLD), Truist Financial (TFC) and Halliburton (HAL) will report quarterly results. Kinder Morgan (KMI) and CACI International (CACI) will report at the postmarket.

Futures on US indices show moderately positive dynamics. We assess the balance of risks for the upcoming trades as neutral with an average level of volatility. We focus on the S&P 500 fluctuations in the range of 6720-6860 points (from -1.1% to +0.9% to the closing level of the previous session).

- Netflix (NFLX) shares are losing about 5% in the premarket despite the release of a strong quarterly report. Investors were alerted by the company's plans to accelerate content cost growth and the suspension of buybacks amid a pending deal with Warner Bros. Discovery (WBD).

- United Airlines (UAL) shares are up about 4% before the opening of the main session. The carrier's fourth-quarter revenue and earnings per share exceeded consensus, and its 2026 guidance confirmed a sustained strengthening in demand. The results were supported by growth in premium revenue and loyalty program income, despite the negative impact of the shutdown.

-Interactive Brokers (IBKR) reported record increases in client accounts and assets, as well as strong profits. At the same time, management comments pointed to pressure on interest income on the back of lower rates and ongoing regulatory uncertainty around the forward-looking market.

-Zions Bancorporation (ZION) reported a marked increase in profits thanks to higher net interest margin and strong deposit growth. At the same time, the company's expenses climbed and loan portfolio dynamics were near zero. The company's shares are up more than 1% on the premarket.

January 20 trading on American stock exchanges closed in a noticeable minus, not far from the intraday lows. The S&P 500 and NASDAQ 100, which fell by 2.06% and 2.12%, showed the maximum correction since October. Dow Jones lost 1.76%, Russell 2000 - 1.21%.

Ten out of 11 sectors included in the broad market index ended the day in negative territory. Only manufacturers of non-cyclical consumer goods (XLP: +0.3%) showed a slight increase. The list of outsiders was headed by technology companies (XLK: -2.6%) and suppliers of cyclical consumer goods (XLY: -2.6%).

The shares of the Magnificent Seven spent the day in the red zone. NVIDIA (NVDA: -4.38%) and Tesla (TSLA: -4.17% ) remained under the most pressure amid heightened geopolitical and trade tensions.

European authorities are discussing a response to the threat of the US President to impose increased import duties on a number of countries in the region. They are considering the imposition of tariffs on American goods worth about €93 billion, as well as restrictions for companies from the U.S. to operate in Europe. An emergency meeting of the EU heads of state dedicated to these issues will be held on January 22.

In parallel, pressure from the debt market intensified. US Treasury bond yields generally rose and the curve shifted towards a sharper rise in "long" rates, which, in particular, was due to the sell-off in Japanese government bonds.

-3M (MMM: -7.0%) reported fourth-quarter organic growth slowed due to deteriorating consumer segment performance. Median EPS guidance for fiscal 2026 was slightly below consensus.

- The authoritative medical publication Lancet published a refutation of the effect of taking paracetamol (acetaminophen) by pregnant women on the development of nervous system abnormalities in children. This supported the quotations of Kenvue (KVUE: +2.3%) and Kimberly Clark (KMB: +2.17%).

- Fastenal's (FAST: -2.6%) fourth-quarter margins and operating income were weaker than expected amid higher costs and less favorable purchasing discounts from suppliers.

This article was AI-translated and verified by a human editor