Major stock indexes finished last week with little change, positioned near record highs as the fourth quarter earnings season intensifies.
In the coming week, three key themes will capture investor attention. President Trump is scheduled to deliver a speech at the World Economic Forum in Davos, Switzerland, on Wednesday morning ET. The focus will be on his tone regarding U.S. interest in Greenland, following Denmark's withdrawal from the event after Trump threatened tariffs on eight NATO allies. The EU is reportedly considering $108 billion in levies on U.S. imports in response, raising concerns about a potential trade war.
Investors are also awaiting updates on Trump's potential nomination for the next Federal Reserve Chair. As of Friday afternoon, prediction markets favored former Fed official Kevin Warsh with 60% odds. This followed Trump telling National Economic Council director Kevin Hassett, another candidate, that he preferred him in his current role.
The third theme is the ramp-up of fourth quarter earnings, highlighted by reports from Netflix and Intel. Netflix is currently involved in efforts to acquire Warner Bros. Discovery, facing competition from Paramount Skydance. Netflix's preferred deal involves streaming and studio assets, not cable or news businesses. Intel's results will offer insight into the artificial intelligence sector, with its stock up about 100% since August 2025 when the U.S. government acquired a roughly 10% stake.
Market activity showed a rotation last week. The small-cap Russell 2000 index closed at a record high for three consecutive days. The Dow Jones Industrial Average, with less exposure to big tech, led gains among major averages. The S&P 500 was virtually unchanged, while the Nasdaq Composite fell about 0.4%. Oil prices rose slightly, less than 0.5%.
The Russell 2000's strength is seen by some as a positive sign for the U.S. economy, as these companies typically have higher domestic revenue exposure than S&P 500 firms. Fundstrat strategist Hardika Singh noted the index is up about 20% over the past six months, compared to a 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, driven by themes like powering AI data centers and rising gold prices. Examples include Bloom Energy, up 60% this year, Kratos Defense & Security Solutions, up 64%, and Hecla Mining, up 31%.
Early leaders in the S&P 500 this year include Sandisk, Lam Research, Western Digital, and Intel, all connected to the AI trade with a hardware focus.