Wall Street looks ahead: strong corporate profits should keep the stock market at record prices

Investors on Wall Street are betting heavily on a strong earnings season in the coming week to keep the advance of US stocks afloat. This is happening against a background of increasing political uncertainty in the US and rising geopolitical tensions, which have so far had surprisingly little impact on the stock market.

Earnings season will be decisive

After a strong stock market year in 2025, the main American indices are still close to record levels at the beginning of 2026. At the same time, nervousness increases. Prices fluctuate more and volatility increases, while investors try to assess which political signals are really relevant to the market.

Attention now shifts to the fourth quarter operating results. In the coming week, Netflix, Johnson & Johnson and Intel, among others, will open their books. This gives the earnings season more breadth, after major banks had already kicked off.

According to market strategists, this moment is crucial. Expectations are high: companies that not only perform better than expected, but also increase their prospects for 2026, can count on extra appreciation. Setbacks, on the other hand, can be severely punished, precisely because the market has already priced in a lot of good news.

Stock markets close to records, but not without bumps

The S&P 500 is still trading near its all-time high, although the index had a turbulent trading week. Major banks such as JPMorgan Chase and Wells Fargo lost ground after their quarterly results.

An additional factor were new policy proposals from Donald Trump, including an unexpected plan to cap credit card interest rates at 10 percent. That proposal surprised the financial sector and put pressure on bank shares. Plans to ban Wall Street parties from the housing market also created uncertainty.

Geopolitics plays a role, but does not dominate

The situation internationally remains tense. Trump’s statements about possible American interference in Iran caused unrest, although a more cautious tone followed later. That has fueled demand for safe havens such as gold, while sectors such as energy have fluctuated sharply.

It is striking that the broad stock market has so far remained relatively insensitive to these developments. Investors seem to see geopolitical risks as background noise for the time being, as long as economic growth and corporate profits remain intact.

The US central bank is also under a magnifying glass

In addition to geopolitics, attention is paid to the independence of the American central bank. The US Supreme Court will soon consider legal issues surrounding Trump’s policies, including his attempts to influence the Federal Reserve.

The position of Fed Chairman Jerome Powell, whose term expires in May, also plays a role in this. Investors fear that doubts about the central bank’s independence could lead to higher inflation expectations and rising borrowing costs for the US government.

For now, Wall Street continues to lean on one pillar: profit growth. As long as companies present strong numbers and exude confidence about 2026, stocks can ignore the political and geopolitical noise. But now that the bar is high and uncertainties are piling up, this earnings season will be an important stress test for stock market optimism.