S&P 500 posts its first two-week losses since June

While the S&P 500 posted its first back-to-back weekly losses since June, the gauge erased Friday’s drop amid solid consumer sentiment and gains in most megacaps

• S&P 500 erased Friday's drop, ending a jittery week near record highs
• Nvidia rose 1.5% on China chip news; Intel fell 17% on weak outlook
• US stocks saw $17B outflows; retail investors bought dips amid volatility

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Wall Street ended a jittery week on a relatively quiet note, with stock traders digesting the rally of the past two days in the run-up to the Federal Reserve decision and the start of the big-tech earnings season.

While the S&P 500 posted its first back-to-back weekly losses since June, the gauge erased Friday’s drop amid solid consumer sentiment and gains in most megacaps. Nvidia Corp. climbed 1.5% as China told tech firms they can prepare orders for H200 AI chips. Intel Corp. sank 17% on a tepid outlook. Small caps trailed the US equity benchmark after beating it for 14 days.

“Stocks are consolidating,” said Louis Navellier at Navellier & Associates. “The laggards are catching up, and the winners are giving back a little.”

Action was fairly muted in bonds. As inflationary pressures linger amid signs of stabilization in the labor market, the Fed is widely expected to hold rates steady Wednesday. Economists surveyed by Bloomberg project reductions only in June and September. The dollar saw its worst week since May.

Markets around the globe were roiled earlier this week by President Donald Trump’s threat to impose tariffs on some European countries over Greenland, before softening his rhetoric as NATO’s chief said a breakthrough was secured. The European Union will suspend retaliatory levies on €93 billion ($109 billion) of US goods for another six months.

“This week’s market action is an important reminder for investors to not allow political headlines out of Washington to affect their portfolio, and to be opportunistic when stocks succumb to headline risk,” said Alexander Guiliano at Resonate Wealth Partners.

The S&P 500 hovered near 6,915. A gauge of megacaps climbed 1%. The Russell 2000 fell 1.8%. The yield on 10-year Treasuries slipped one basis point to 4.23%. The dollar lost 0.7%. The yen jumped the most since August on speculation Japan could intervene to halt its slide.

Oil rallied as traders factored in the possibility of American military action in Iran and a massive winter storm in the US. Gold hit all-time highs. Silver topped $100. Copper rallied above $13,000.

Despite operating in the shadow of political storm clouds in recent weeks, the US stock market is still relatively close to a record, noted Daniel Skelly, head of Morgan Stanley’s Wealth Management Market Research & Strategy Team.

“If those clouds can part, positive sentiment about some of this year’s dominant themes may get a chance to re-emerge,” he added.

US stocks suffered nearly $17 billion in outflows in the week ended Jan. 21, according to a Bank of America Corp. note, citing EPFR Global data. After briefly erasing its January gain, the S&P 500 reclaimed its year-to-date advance ahead of high-stakes results from several tech giants.

“Many of the ‘Magnificent Seven’ names have actually underperformed the S&P 500 over the past 12 months, so these next few earnings reports can be an important catalyst,” said Guiliano at Resonate Wealth Partners.

There were doubters, all across Wall Street by some accounts, that Tuesday’s stock rout would be short-lived, a pullback not sharp enough to dissuade Trump from waging a trade war with Europe for control of Greenland.

Yet individual investors plowed $4 billion into US equities as the S&P 500 suffered its biggest drawdown in three months, according to data from JPMorgan Chase & Co. Another $2.3 billion flowed in on Wednesday, just in time for Trump to unleash a rally by standing down from his tariff bluster.

“Investors remain conditioned to buy every dip — retail money rushed in during this week’s selloff, reinforcing a pattern that’s been in place since 2020,” said Mark Hackett at Nationwide. “That combination of broadening leadership and deeply ingrained buy-the-dip behavior continues to tilt the odds in favor of the bulls.”

Stress-driven selloffs are becoming increasingly short-lived, and the latest one was not echoed in other technical indicators such as credit spreads, the put/call ratio, or financial conditions, Hackett noted.

“Following the strong run to record highs, it is not unusual or unhealthy to see a period of consolidation,” he said.

Hackett also added that the pattern in seven of the past eight quarters is that equity markets rally into earnings season but are met with volatility and market sluggishness, despite better-than-expected results, as skepticism arises, investors are more reactive and companies are unable to buy back shares due to earnings blackout periods.

As the US earnings season gathers momentum, early results are offering a window into the economic and political crosscurrents shaping Corporate America’s outlook for the year ahead. Stocks are trading at high valuations after the S&P 500 clocked in three straight years of double-digit growth, leaving little room for error.

Earnings resilience and stability in the rates market are crucial for stocks to shrug off geopolitical noise, according to Barclays Plc strategists led by Emmanuel Cau.

The slow start of the earnings season suggests geopolitics isn’t the only driver of stock volatility, according to RBC Capital Markets strategists led by Lori Calvasina. They noted that analysts’ 2026 earnings growth forecast has fallen slightly while macro commentary remains cautiously optimistic on earnings calls.