EPS? EP-Yes! Stocks edged higher at the start of the week as investors chose to focus less on the continuing saga at the Federal Reserve and more on the coming fourth-quarter earnings season—another potential blockbuster that could boost the nascent 2026 rally.

The Dow Jones Industrial Average and the S&P 500 each rose 0.2% to new records, while the Nasdaq Composite gained 0.3%.

Stocks got off to a rocky start after the government launched a criminal probe into Federal Reserve Chair Jerome Powell, issuing grand jury subpoenas related to his Senate testimony last June about a multiyear project to renovate the Fed’s headquarters in Washington, D.C. (More on that below.) Nonetheless, stocks rebounded as investors looked ahead to the start of fourth-quarter earnings season.

With the economy humming along, it’s easy to see why the market is feeling good about upcoming results.

“Corporate America delivered more than 8% revenue growth in the third quarter of 2025 and in our view, should be able to do that again in the fourth quarter, more than enough to extend the double-digit earnings growth streak—now at four quarters,” writes Jeff Buchbinder, chief equity strategist for LPL Financial. “Two other reasons to be confident. First, artificial intelligence investment, which is expected to drive most of the earnings growth for the quarter, isn’t slowing down. And second, the average level of the U.S. Dollar Index was down more than 5% from the year-ago quarter, boosting earnings generated in foreign currencies by U.S. multinationals operating abroad.”

Not every stock was able to join the party on Monday. Some stocks were hurt after President Donald Trump’s remarks about capping credit card interest rates at 10% for a year. Banks, card issuers, and even partners like airlines were affected.

Such a move would require an act of Congress but the president’s proposal raises the possibility of action.

“A key issue to watch in the coming days and weeks will be the response of the chairmen of the House Financial Services Committee and the Senate Banking Committee,” notes Raymond James Washington Policy Analyst Ed Mills. “We expect them to raise concerns that an interest rate cap would cut off credit to the same borrowers that the president is trying to help,” given that consumers are likely to turn to alternatives like buy-now, pay-later providers.

Credit where credit is due—we live in interesting times.

-	Last	Chg%
↑ Dow Jones Industrial Average	+49,590.20	+0.17%
↑ S&P 500 Index	+6,977.27	+0.16%
↑ NASDAQ Composite Index	+23,733.90	+0.26%

1/12/2026, 8:00:22 PM ET

The Hot Stock: Western Digital +5.8%
The Biggest Loser: Synchrony Financial -8.4%

Best Sector: Consumer Staples +1.4%
Worst Sector: Financials -0.8%

MESSAGE FROM: WSJ | OPINION

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Jerry-Rigged

While the market ultimately shrugged off the criminal probe against Powell, it’s important to note that the latest crack in Fed independence could eventually rattle markets.

That said, there seems to be bipartisan support for the Fed Chair. On Monday, a group of his predecessors, Treasury secretaries, and economists published a statement in his defense, including Ben S. Bernanke, Alan Greenspan, Timothy F. Geithner, Jacob J. Lew, Henry M. Paulson, Robert E. Rubin and Janet Yellen.

Powell himself called the action politically motivated, saying it “should be seen in the broader context of the administration’s threats and ongoing pressure.”

“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” Powell said.

Trump said he didn’t have knowledge of the Justice Department’s plans.

As my colleagues Nicole Goodkind and Liz Moyer wrote, this isn’t the first time the administration has threatened Powell, but it does ratchet up the stakes, even as a legal basis for the case—alleging Powell deviated from government approved plans—seems shaky:

Legal experts have said those arguments face steep statutory and constitutional hurdles, noting that the Federal Reserve Act gives the Fed’s Board of Governors control over its facilities and doesn’t provide a clear mechanism for a president to remove a chair over operational decisions.

Carl Tobias, a constitutional law professor at the University of Richmond, said the use of grand jury subpoenas marks a significant escalation from earlier threats of civil litigation. Subpoenas are typically the first step in a criminal investigation, but it remains unclear what criminal theory prosecutors could plausibly pursue, he said.

“They better have a pretty strong case, or they’re not going to go very far,” Tobias said, adding that inaccurate or disputed testimony about a complex, multiyear renovation would ordinarily be handled through congressional oversight, not criminal prosecution.

Likewise, any proceedings related to the case, which would involve a grand jury and federal court, is unlikely to take place before Powell’s term ends in May.

Still, any administration pressure on the Fed could reverberate long after Powell is gone.

“Economic theory has long held that the U.S. benefits from a market perception, established by Paul Volcker in the 1970s, that the Federal Reserve will always do what is needed to contain inflation,” notes Glenmede’s Chief of Investment Strategy Jason Pride. “This results in anchored long-run inflation expectations and associated long-term interest rates that are lower than otherwise would be.”

As Barron’s Martin Baccardax writes, the “collective actions of the ‘everywhere’ president are set to challenge the so-called everything rally.”

The Calendar

Bank of New York Mellon, Delta Air Lines, and JPMorgan Chase report earnings tomorrow.

The National Federation of Independent Business releases its Small Business Optimism Index for December. The consensus estimate is for a 99.5 reading, half a point more than in November.

The Bureau of Labor Statistics releases the consumer price index for December. Economists forecast a 2.7% year-over-year increase, even with November’s figure. The core CPI, which excludes food and energy, is expected to also rise 2.7%, one-tenth of a percentage point more than previously.

The Census Bureau reports new home sales for both September and October, as it catches up on economic data delayed but the government shutdown late last year. The consensus call is for a seasonally adjusted annual rate of 718,000 single-family homes sold, down from 800,000 in August.

—Dan Lam

What We’re Reading Today

• More Gains for Stocks, Especially Those Left Behind Until Now

• Beating Back the Bubble: A Defensive Fund Portfolio for These Times

• Trump Dislikes Exxon’s Venezuela Foot-Dragging. There’s More to Come.

• Alphabet Touches $4 Trillion Market Cap for the First Time

• Walmart Stock Is Rising. It’s Not Just a Google AI Deal Giving It a Boost.

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