The earnings season that kicks off next week looms large for stock pickers, and could cement the recent broadening out of the bull market. Inflation data is also on the docket. The 2026 stock market that’s taking shape is looking different from what came before. While the S & P 500 is widely forecast on Wall Street to post another double-digit advance in 2026, investors who are making individual stock picks, hoping to beat the market this year, are choosing their positions. This week, the Dow Jones Industrial Average rallied straight out the gate, while the S & P 500 and Nasdaq Composite were more subdued, as investors rotated money out of technology and toward cyclical sectors, such as materials and energy, instead. Value stocks outperformed growth. Small caps outpaced large caps. For stock pickers, the upcoming earnings season could serve up its own bounty. While reactions to earnings results have been larger-than-usual ever since the Federal Reserve started raising interest rates in 2022, Wells Fargo noted, the difference between what the options market and the S & P 500 are pricing in for the fourth quarter reporting season is expected to widen to its biggest gap since at least 2017. Options are pricing in an average move of 5.1% in reaction to fourth-quarter earnings, while the implied move in the S & P 500 is just 3.9%, Wells Fargo said. In other words, any volatility could spell opportunity for investors with a differentiated view. “We expect another season of big reactions,” Wells Fargo equity analyst Ohsung Kwon wrote this week. “An alpha opportunity for stock pickers.” IWM 5D mountain IWM, 5-day performance Eric Clark, investment chief at Accuvest Global Advisors, is looking for dislocated growth stocks — high quality businesses, with capable management and strong growth opportunities that are under-loved and underappreciated by the market. Netflix and Spotify are two examples Clark highlighted as stocks he’s excited for heading into the earnings season. Each stock is down about 5% to start the year, and more than 30% off their 52-week highs. “If you do the work on the business, and get in when the chart is broken, knowing that at some point the chart won’t be broken,” Clark said, “then you’ll have a whole new group of buyers come in.” He’s less enthused about the potential reaction to financial stocks’ earnings, which may have front run any gains from earnings after their rally this week. The nation’s largest banks kick off earnings next week, led by JPMorgan Chase , Citigroup , Wells Fargo , and joined by a smattering of regional banks. Others remain confident in the banks as lower borrowing costs, fiscal stimulus and stepped-up dealmaking brighten the outlook for financials in 2026. “You could have a ‘buy the rumor, sell the news’ type of situation,” said Mike Mayo, head of U.S. large-cap bank research at Wells Fargo Securities. “But we’d be buyers after any potential ‘sell the news’ event.” Also on the calendar next week is the latest inflation data, made more important after Friday’s December jobs report showed the labor market, while weakening, remains stable enough that the Federal Reserve is likely to hold off on interest rate cuts for now. Fed funds futures were last pricing in two quarter point cuts in 2026, starting in June, according to the CME FedWatch tool . BeiChen Lin, senior investment strategist at Russell Investments, expects inflation will continue to ease toward the central bank’s 2% target, as tariff-induced inflation pressures subside and shelter and services inflation start to cool. “Our general expectation is that as we continue into 2026 we do expect that inflationary pressures will generally follow that moderating trend,” Lin said. Still, it could come down to the looming earnings season for companies to justify their steep valuations. Heading into next week, Wall Street expects Corporate America to continue to strengthen, with big tech driving growth and improved fortunes in sectors such as industrials and finance. At Wells Fargo, Kwon expects companies will beat expectations, though he noted that companies estimates will have to hold where they are. The S & P 500 is set to post a blended earnings growth rate of 8.1%, according to FactSet data. “It’s an earnings driven market,” Kwon wrote. Week ahead calendar All times ET. Monday, Jan. 12 Tuesday, Jan. 13 8:30 a.m. Consumer Price Index (December) 8:30 a.m. Real Earnings (December) 10:00 a.m. New Residential Sales (September, October) Earnings: JPMorgan Chase , Delta Air Lines , The Bank of New York Mellon Wednesday, Jan. 14 8:30 a.m. Producer Price Index (December) 8:30 a.m. Retail Sales (November) 10:00 a.m. Manufacturing and Trade: Inventories and Sales (October) Earnings: Citigroup , Wells Fargo , Bank of America Thursday, Jan. 15 8:30 a.m. U.S. Import and Export Price Index (November) Earnings: J.B. Hunt Transport Services , Morgan Stanley , Goldman Sachs Group , BlackRock Friday, Jan. 16 Earnings: State Street , PNC Financial Services Group , Regions Financial , M & T Bank
