Major stock indexes finished last week with little change, positioned near record highs as the fourth quarter earnings season intensifies.
A market rotation was observed, with the small-cap Russell 2000 closing at a record high on the final three trading days of the week. The Dow Jones Industrial Average, which has less exposure to Big Tech and the dominant AI theme, led gains among the major averages.
The S&P 500 was virtually unchanged for the week, while the Nasdaq Composite fell about 0.4%.
Oil prices, closely watched amid geopolitical headlines concerning Venezuela, Iran, and Greenland, also saw little weekly change, rising slightly less than 0.5%.
In the coming week, investors will track three key themes as earnings season gains momentum and the Federal Reserve's next meeting approaches.
The first is President Trump's scheduled speech at the World Economic Forum in Davos, Switzerland, expected on Wednesday morning ET.
The second involves updates on Trump's potential nominee for the next Federal Reserve Chair. As of Friday afternoon, Polymarket prediction markets favored former top Fed official Kevin Warsh with 60% odds. This followed Trump telling Kevin Hassett, director of the National Economic Council and another leading candidate, at a Friday event that he preferred him in his current role.
The third key theme is the ramp-up in fourth quarter earnings, highlighted by results from Netflix and Intel.
Netflix is currently involved in a major media drama as it attempts to acquire Warner Bros. Discovery while facing competing bids from Paramount Skydance. Netflix's bid for Warner Bros. Discovery's streaming and studio assets remains its preferred deal. Bloomberg reported last week that Netflix was preparing to sweeten its offer to an all-cash bid, matching some terms of Paramount's proposal. Netflix's proposal does not include Warner Bros. Discovery's cable and news businesses, which Paramount's bid does.
Intel's results will offer a read on the state of the artificial intelligence trade. The company's stock is up about 100% since the US government announced a roughly 10% stake in the chipmaker in August 2025.
Two weeks into 2026, a market rotation is evident. The small-cap Russell 2000 is trading at a record high. The equal-weighted S&P 500 closed at a record high on Jan. 13.
Meanwhile, software stocks like Intuit, ServiceNow, Adobe, AppLovin, and Salesforce are all down more than 12% this year.
Fundstrat strategist Hardika Singh wrote in a Friday client note that the Russell 2000's strength is a positive sign for investors' outlook on the US economy, as these companies typically have a higher share of revenue from domestic customers than S&P 500 companies. Singh noted the Russell 2000 is up about 20% over the past six months, against a roughly 10% gain for the S&P 500.
Singh wrote that shares of companies from electricity providers to defense and mining firms are participating in the rally, a sign it has legs. Examples include Bloom Energy, up 60% this year, Kratos Defense & Security Solution, up 64%, and Hecla Mining, up 31%. She attributed gains to themes like the urgent need to power AI data centers and a rally in gold prices benefiting mining margins.
Leading early-year performers in the S&P 500 include Sandisk, Lam Research, Western Digital, and Intel, all plays on the AI trade with a hardware slant.