S&P 500 Hits Record High as Dollar Selloff Deepens: Markets Wrap

(Bloomberg) — Wall Street traders sent stocks to all-time highs on speculation that solid corporate earnings will keep powering market gains. The dollar slid to an almost four-year low. Gold topped $5,100.

Not even a slump in consumer confidence prevented an advance that put the S&P 500 close to 7,000. Tech led gains before megacap results. UnitedHealth Group Inc. paced losses in insurers on a disappointing forecast and as the US proposed holding payments to private Medicare plans flat next year. In late hours, Texas Instruments Inc. gave a strong outlook.

The dollar slid to its lowest since February 2022 as signs of US support to boost the yen reinforced the argument about potential coordinated intervention to guide the greenback lower against key trading partners.

On the eve of the Federal Reserve decision, short-term Treasuries outperformed. That’s despite bets on a pause in the rate-cutting cycle as a steadier jobs market restores a degree of consensus among officials after growing division.

The expected decision to hold rates is likely to amplify the outrage of President Donald Trump, who wants them slashed.

With the economy still displaying exceptional strength, the Fed’s messaging is likely to emphasize a data‑driven approach to future policy decisions, according to Chris Brigati at SWBC. Meantime, he said the tone from this week’s Magnificent Seven earnings should be solid, and upward revisions from analysts signal confidence is building.

“This week is pivotal in setting the market’s near‑term tone as 2026 progresses,” Brigati noted. “History shows that a strong January often frames the narrative for the rest of the year, with investor psychology playing an outsized role.”

The S&P 500 rose 0.4%. The Dow Jones Industrial Average fell 0.8%. The Russell 2000 added 0.3%. The yield on 10-year Treasuries advanced two basis points to 4.23%. The dollar sank about 1%.

Oil rallied as Trump touted a growing US military presence near Iran, while traders monitored the fallout from a sweeping winter storm.

“While short-term volatility is likely, we maintain our overall positive view toward risk assets,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management. “Maintaining a diversified portfolio will help investors navigate markets with greater confidence.”

With about a third of S&P 500 companies by market capitalization reporting results this week, she bets robust figures should boost sentiment and continue to underpin equity performance.

Almost 80% of the firms in the US equity benchmark that have reported results thus far have beaten analyst earnings estimates, according to data compiled by Bloomberg.

“We expect tech earnings to be strong,” Hoffmann-Burchardi noted. “But we also expect earnings growth to broaden across sectors, with cyclical areas of the economy poised to benefit from supportive fiscal and monetary policies.”

At HSBC, Max Kettner says expectations for S&P 500 fourth-quarter results are still “way too low.”

“So ahead of this week’s pivotal earnings releases, we think it makes sense to rotate from the rates-sensitive high-beta sectors back to megacaps,” he noted.

Despite these very solid results, share prices of companies beating on the top- and bottom-lines have witnessed negative relative price action after reporting, according to Chris Senyek at Wolfe Research.

“Said differently, double beats are being punished for solid results,” he said. “We do not view this trend as sustainable through earnings season and expect double beats to exhibit positive price action as more companies report.”

With several “Magnificent Seven” companies set to report this week, Senyek expects solid results from the space and positive price action luring investors back.

Microsoft Corp., Meta Platforms Inc. and Tesla Inc. report earnings on Wednesday, followed by Apple Inc. on Thursday. Alphabet Inc., by far the best performer among megacaps last year, reports on Feb. 4. Results from Amazon.com Inc. land on Feb. 5 and Nvidia Corp.’s on Feb. 25.

The group is expected to post 20% profit growth for the fourth quarter, which would be the slowest pace since early 2023, according to data compiled by Bloomberg Intelligence. So the companies are under pressure to show that the vast sums they’ve committed to capital expenditures are starting to pay off in a bigger way.

While big tech is rebounding ahead of earnings, so far this year, the high-profile cohort of megacaps is lagging behind small firms.

Optimism that the American economy is set to take off has fueled the rotation, with companies whose fortunes are closely tied to the business cycle attracting investor cash. At the same time, artificial intelligence investing has become less monolithic in the tech sector, with investors starting to choose winners and losers.

Amid persistent debate around an AI bubble, Ari Wald at Oppenheimer & Co. highlights a more nuanced market dynamic: the widening gap between large-cap growth and the rest of the market has been driven less by excess in leadership and more by persistent underperformance among lagging benchmarks.

Long-term rate-of-change measures for the Nasdaq 100 remain well below late-1990s extremes, underscoring how steady – not speculative – the index’s advance has been, he said. By contrast, comparable momentum measures for small caps sit near the lower end of their historical range.

“This divergence argues that a reversal in the internal spread is more likely to come via catch-up – broader participation – rather than catch-down via a market-wide unwind,” Wald concluded.

In the run-up to the Fed decision, data showed US consumer confidence declined in January to the lowest level in more than a decade on more pessimistic views of the economy and labor market.

The Conference Board’s gauge slid to 84.5, from an upwardly revised 94.2 last month. The figure was the lowest since 2014 and fell short of all estimates in a Bloomberg survey of economists.

“Given this latest data, expect the unemployment rate to rise,” said Jeff Roach at LPL Financial. “This will weigh on retail sales in these coming months.”

On the surface, the latest report looks like a “red flag,” but for investors, the signal is more nuanced, according to Lale Akoner at eToro.

“This kind of confidence slump tends to slow discretionary spending rather than trigger a full economic downturn,” Akoner said. “If inflation continues to cool and growth softens gradually, rate cuts later in the year or into 2026 become more likely.”

That backdrop is typically supportive for long-duration assets like equities and bonds, even if volatility persists in the short term, Akoner noted.

With inflation sticky but not accelerating, the labor market cooling without collapsing, and fiscal stimulus set to support growth in early 2026, policy rates likely need to return to neutral — but not below, according to Seema Shah at Principal Asset Management.

“With a leadership change approaching, the Fed is likely to place slightly more emphasis on the employment side of its dual mandate,” she said. “We expect two Fed cuts in 2026, taking rates close to neutral. Timing will be data-dependent, but a rising unemployment rate could prompt the cuts to be brought forward.”

While Fed Chair Jerome Powell will likely emphasize a cautious, data-driven approach, key insights into the central bank’s outlook on growth and inflation will be closely watched, according to Kezia Samuel at AssetMark.

“Amid fading tariff pressures, an ongoing drop in shelter inflation, and a sluggish labor market, we anticipate the Federal Reserve will resume its easing cycle in 2026, most likely by implementing one or two 25-basis-point interest rate cuts,” Samuel said.

Investors in the $30 trillion Treasury market have positioned for an extended hold on rates. Swap contracts show the next cut is now expected in July, with the potential for another toward the end of the year.

This is a very “boring” Fed meeting during very interesting times, according to Christian Hoffmann at Thornburg Investment Management.

That’s not to say that fixed income markets won’t be volatile with lots of catalysts in the background with issues on the geopolitical front, the Japanese bond market, and the talk about a successor to Powell creating uncertainty, he noted.

“Looking at the playing field today two to three rate cuts seems very reasonable, but the picture and the backdrop can evolve very quickly,” said Hoffmann.

There is now a higher burden to justify cuts, and while Powell is likely to sound non-committal around near term rate reductions, he may highlight that the median official still looks for easing this year, according to TD Securities strategists.

“With cut pricing falling, investors will focus on any updated guidance,” they said. While the meeting is unlikely to be a big driver of the dollar, “our bias remains to sell into any USD rallies.”

Corporate Highlights:

United Parcel Service Inc. forecast full-year sales above Wall Street’s expectations as it forges ahead with plans to cut less-profitable package volume out of its network. UPS expects to cut as many as 30,000 positions this year, part of an ongoing effort by the package-delivery giant to rein in costs and boost profitability. UnitedHealth Group Inc. forecast a decline in 2026 revenue, the first annual contraction in more than three decades, as the insurer falters in its attempt to rebuild confidence with investors after a stunning fall last year. Boeing Co. generated cash for a second straight quarter and reported a 57% bump in sales during the final three months of 2025, as the US planemaker continues its recovery and benefits from surging orders. Boeing aims to deliver 500 of its 737 family jets this year as it ramps up production, and it won’t be able to rely on a stockpile of previously built Max models to bolster its results, executives said. American Airlines Group Inc. said it’s poised for a strong year as the carrier ramps up premium offerings, but first it’s trying to survive winter weather that’s prompting thousands of cancellations at major US hubs. American Airlines reported fourth-quarter results that missed analyst estimates. JetBlue Airways Corp. reported a wider loss than expected last quarter, capping a bruising 2025 as the US carrier hopes demand from higher-paying customers will fuel a return to profitability. United Airlines Holdings Inc. is adding new routes and increasing flying from Chicago, escalating competition with American Airlines Group Inc. at one of the world’s busiest airports. General Motors Co. expects profits to grow as much as $2 billion this year and plans to return more of that to shareholders with a higher dividend and buybacks, fueled by demand for its highest-margin vehicles. Amazon.com Inc. is shuttering its Amazon-branded grocery stores and automated grab-and-go markets, eliminating two centerpieces of its push into physical retail. RTX Corp.’s profit topped Wall Street estimates in the final months of last year, a sign of momentum as the aerospace and defense manufacturer awaits a potentially huge jump in US military spending. RTX plans to continue paying dividends to investors after President Donald Trump attacked the company for sluggish weapons output and lavish shareholder returns. Northrop Grumman Corp.’s fourth-quarter income rose 17% and the company reached a record backlog in orders as nations boost spending on weapons and space programs amid heightened global tensions. FedEx Freight Holding Co. raised $3.7 billion in its debut investment-grade bond sale, ahead of its planned June 1 spinoff from FedEx Corp. Kimberly-Clark Corp. reported profit that beat expectations as the maker of Huggies diapers and Scott paper towels captured more customers by cutting back on prices. OpenAI is releasing a free tool aimed at making it easier for scientists to use ChatGPT to draft research papers and collaborate with colleagues, part of a larger effort to position its chatbot as an aide for scientific work and discoveries. Google was handed a six-month European Union deadline to lift technical barriers to rival AI search assistants on Android and give key data to other search engine providers in the latest round of its Big Tech crackdown. Micron Technology Inc. will invest an additional $24 billion in Singapore over the next decade to expand its manufacturing capabilities, part of a broader expansion effort during an AI-induced memory chip shortage. Corning Inc. announced a multiyear, up to $6 billion agreement with Meta Platforms Inc. to supply optical fiber, cable, and connectivity solutions for Meta’s advanced data centers supporting its AI ambitions. Cloudflare Inc. soared as analysts are upbeat about an increase in artificial-intelligence workloads and recent Clawdbot adoption. Pinterest Inc. said it plans to cut “less than 15%” of its workforce and reduce office space as it shifts resources toward investing in artificial intelligence. NextEra Energy Inc. is offering large amounts of power for sale from its nuclear plants in Wisconsin and New Hampshire, as major technology companies race to secure nuclear energy for artificial-intelligence data centers. Lyft Inc. is working on offering its rideshare service to teenagers, catching up to an in-demand category that larger rival Uber Technologies Inc. first launched about three years ago. HCA Healthcare Inc.’s better-than-expected guidance eased investor concerns about expiring Affordable Care Act subsidies. Sysco Corp. said it expects to meet the high end of its full-year profit outlook on improving demand from customers. Tether Holdings SA said it has launched a US-focused stablecoin, as the world’s largest issuer of dollar-pegged tokens prepares to return to crypto’s largest market. Sonos Inc. introduced its first new device in over a year, marking the end of an intentional lull in product launches as the company prioritized improving its software and restoring the brand’s reputation under new Chief Executive Officer Tom Conrad. UBS Group AG asked a US court to dismiss a suit filed by its ex-trader Tom Hayes that accuses the lender of handing him over on a “silver platter” to global prosecutors in order to protect the bank and its senior leadership during the Libor rigging scandal. Sales at LVMH’s key fashion unit fell over the holiday season as the Louis Vuitton owner continued to suffer from sluggish demand. Breitling AG’s chief executive officer expects the US to cut tariffs on Swiss watches, underscoring his bullishness on the private equity-backed firm’s biggest market even as Washington keeps the industry guessing. France’s billionaire Pinault family agreed to sell its 29% stake in Puma SE to China’s Anta Sports Products Ltd., paring back its holdings beyond the luxury-goods industry as it focuses on a turnaround at the key Gucci brand. Samsung Electronics Co. announced that its Galaxy Z TriFold, the first foldable phone of its kind to ship in the US, will sell for $2,899 and become available Jan. 30. Mitsubishi UFJ Financial Group Inc. is considering issuing a significant risk transfer that’s designed to appeal to insurance companies, according to people familiar with the matter. China Vanke Co. won more breathing room as it prepares what would be one of the country’s biggest-ever restructurings, after holders of two yuan bonds accepted the developer’s plan to delay the bulk of those payments by a year. Billionaire Gautam Adani’s conglomerate and Brazil’s Embraer SA announced a partnership to build aircraft in India in what would be the country’s first manufacturing facility in civil aviation. What Bloomberg strategists say…

“Parallels to the dollar bearishness seen at the peak of tariff turmoil shows traders have yet to fully shake off the drag from the policy uncertainty that plagued the currency for much of last year. While the risks are different this time, the concept of weakness resulting from policy headwinds is a familiar catalyst for investors who have concluded it’s time to diversify away from the currency.”

— Kristine Aquino, Managing Editor, Markets Live. For the full analysis, click here.

Some of the main moves in markets:

Stocks

The S&P 500 rose 0.4% as of 4 p.m. New York time The Nasdaq 100 rose 0.9% The Dow Jones Industrial Average fell 0.8% The MSCI World Index rose 0.7% Bloomberg Magnificent 7 Total Return Index rose 0.9% The Russell 2000 Index rose 0.3% Currencies

The Bloomberg Dollar Spot Index fell about 1% The euro rose 1.3% to $1.2029 The British pound rose 1.1% to $1.3832 The Japanese yen rose 1.2% to 152.34 per dollar Cryptocurrencies

Bitcoin rose 1.6% to $89,342.51 Ether rose 3.2% to $3,021.33 Bonds

The yield on 10-year Treasuries advanced two basis points to 4.23% Germany’s 10-year yield was little changed at 2.87% Britain’s 10-year yield advanced three basis points to 4.52% The yield on 2-year Treasuries declined two basis points to 3.57% The yield on 30-year Treasuries advanced four basis points to 4.84% Commodities

West Texas Intermediate crude rose 2.9% to $62.41 a barrel Spot gold rose 3.4% to $5,178.36 an ounce ©2026 Bloomberg L.P.