Fed Bombshell Arrives! Super Earnings Week Looms, How Will the Magnificent Seven Perform

US stocks are heading into a "super storm week."

From January 27th to 28th, the Federal Reserve will hold its policy meeting and announce its interest rate decision on January 29th. During the same period, tech giants such as Apple, Microsoft, Meta, and Tesla will also be releasing their earnings reports.

The image is AI-generated.

The market generally expects the Federal Reserve to pause interest rate cuts at this meeting, while the earnings reports of tech giants have become a crucial window for testing the returns on AI investment.

The upcoming FOMC meeting has become the focus of the market. According to the latest CME "FedWatch" data, as of January 25, the probability of a 25 basis point rate cut by the Fed in January has dropped to 4.4%, while the probability of maintaining the current interest rate remains high at 95.6%. This expectation is closely related to the Fed's policy shift after three consecutive rate cuts in 2025 - the Fed currently needs to find a balance between persistent inflationary pressures and resilient economic growth.

A Reuters poll of 100 economists shows that all respondents expect the Federal Reserve to maintain the benchmark interest rate range at 3.50%-3.75% during this meeting. More notably, approximately 58% of the surveyed economists predict that rates will remain unchanged throughout the entire first quarter. This expectation represents a significant shift from last month, when the majority of economists anticipated at least one rate cut in March. Economists at HSBC noted in a report that Fed Chair Jerome Powell is likely to emphasize that future rate adjustments will depend entirely on the evolution of economic data rather than a preset path.

The image above was generated by AI.

Political interference in the Federal Reserve's decision-making is becoming increasingly apparent. Currently, there are serious divisions among internal Fed policymakers regarding the economic outlook, while external pressures persist. The Trump administration's intervention in Fed personnel matters is particularly prominent: criminal allegations against Powell are still under investigation, a proposal to remove Governor Lisa Cook awaits a Supreme Court hearing, and Treasury Secretary Bessenet revealed that Trump may decide on the next Fed chair as early as next week. Bernard Yaros, US Chief Economist at Oxford Economics, warns that the criminal investigation poses unprecedented obstacles to the selection of a new chair, making it difficult for Trump to completely fill vacancies with candidates who favor interest rate cuts. This political uncertainty has become a key risk variable for investors assessing the path of interest rates.

Jeremy Schwartz, a senior U.S. economist at Nomura and one of last year's most accurate forecasters, noted that while the economic outlook suggests the Federal Reserve should remain on the sidelines—or even reconsider rate hikes later this year or next—the Fed is likely to "stay put" in practice until Chair Jerome Powell's term ends in May. He expects that once new leadership takes office, they may push for an additional 50 basis points of rate cuts later this year. This uncertainty in the policy path has made market forecasts for interest rate trends increasingly complex.

Next week, roughly one-fifth of the S&P 500 companies will release their latest earnings reports, with members of the "Magnificent Seven" including Apple, Microsoft, Meta, and Tesla taking center stage. Specifically, Microsoft, Meta, and Tesla will release their earnings after the market closes next Wednesday, while Apple and Amazon will make their debut on Thursday after the market closes. The core issue of this earnings season is whether tech giants are truly starting to benefit from AI-related investments.

Goldman Sachs projects Apple's revenue for the first quarter of fiscal year 2026 (ending December 2025) to reach $137.4 billion, representing an 11% year-over-year increase. The iPhone business is expected to be the primary growth engine, contributing $78 billion in revenue, up 13% year-over-year. Earnings per share are forecasted at $2.66, consistent with market consensus, while the gross margin is expected to remain steady at 47.7%. This forecast validates Apple's sustained competitiveness in the consumer electronics sector, though the market remains focused on whether its AI strategy can translate into tangible earnings.

Tesla's earnings reports have shifted their focus from traditional financial metrics to cutting-edge technological advancements. Investors are closely monitoring the development progress of Robotaxi, unsupervised autonomous driving, the Optimus humanoid robot, and AI5 chips. A recent report from Morgan Stanley indicates that the incremental information regarding these technological updates will determine stock price reactions, rather than traditional delivery volume or profit margin data. The firm forecasts Tesla's 2026 delivery volume to be 1.6 million vehicles, 9% lower than the general market expectation and a year-on-year decrease of 2.5%. During the earnings call, Tesla may provide updates on the progress of the AI5 chip design, as well as how chip projects and computing power investments will evolve over time, including initiatives like AI6+ and Dojo.

The financial reports of global storage giants Samsung Electronics and SK Hynix are also worth watching, with AI technology and the semiconductor cycle likely to be key highlights. The market is generally focused on these companies' capacity expansion, technological innovation, and cost control capabilities driven by AI, which directly relates to determining the turning point of the semiconductor industry cycle.

The current market consensus is that the Federal Reserve will pause interest rate cuts, but the actual decision still holds variables. If economic data shows unexpected fluctuations, such as inflation rebounding more than anticipated or a significant weakening of the job market, the Fed may adjust its policy path. This uncertainty makes investors more cautious in asset allocation, and stock market volatility may consequently increase.

The performance of tech giants' earnings reports will directly influence market sentiment. If companies like Apple and Microsoft demonstrate that AI investments have begun to generate tangible returns, it could drive further valuation expansion for tech stocks. Conversely, if earnings reports show that capital expenditures have failed to translate into anticipated gains, it could trigger concerns about an AI bubble, leading to stock price corrections. Tesla's technological updates are particularly crucial, as breakthroughs in its autonomous driving and robotics projects could reshape investor confidence in the entire sector's technology.

The intersection of political factors and market uncertainty has made this "Super Earnings Week" far more complex than those in the past. The ambiguity of the Federal Reserve's policy path, the validation period of tech giants' AI strategies, and the potential risks of political intervention collectively form the current market's multi-layered game of maneuvering. Investors must conduct comprehensive assessments across multiple dimensions—including macroeconomics, corporate earnings, and political risks—to seize opportunities and mitigate risks amidst this "Super Storm Week."

The upcoming "super storm week" is both a validation period for the Fed's policy pivot and a critical test window for tech giants' AI strategies. Market participants need to observe policy signals, corporate data, and political developments with a more cautious attitude, seeking certainty amidst uncertainty, and providing solid support for subsequent investment decisions.