Earnings Season Rolls On—What Will It Tell Us?

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What's Happening Today

As earnings season rolls on, investors will likely be distracted by quarterly earnings, which could cause market fluctuations as they digest companies' reports. So don't be surprised if you see company stocks or even entire industries swing in either direction based on what was said in reports. Companies that do well could be rewarded, while underperforming companies might be punished.

Like last week when big banks started reporting earnings, if corporations express concern about the future economic climate, investors could begin to fret over an upcoming recession and you might see your investment accounts take a hit.

The Federal Reserve kicks off its first policy meeting of the year at the end of the month. And we'll receive a few pieces of economic data along the way that might make investors nervous, or give way to cautious optimism about the future path of rate hikes.

One of those key pieces of economic data will come from tomorrow's retail sales report set to be released by the Census Bureau. Economists are expecting sales to drop by 1%, a steeper decline than the month prior, as shoppers pull back on spending. Retail sales are important because consumer spending comprises roughly 70% of the U.S. economy. When we all shop less, the economy starts to slow and falter. While the central bank wants the economy to do just that, a slowing economy will raise alarms—again—that we could be tipping into a recession.

- Kristin

What's Happening Today

Chief Executives, Economists Brace for Recession as Davos Begins (Bloomberg)

Shopper Rebellion Against Higher Prices Helps Slow Inflation (The Wall Street Journal)

As Inflation Sinks, Optimism Hits 8-Month High (The Balance)

The World Has a Major Debt Problem. Is a Reset Coming? (CNN Business)

Should I Invest Now, or Wait Until the Market Sinks More? (The Balance)

Inflation Beat Typical Social Security Hike By $1,054 (The Balance)

How Is Severance Pay Taxed? (The Balance)

Term of the Day

Market Capitalization

Put simply, market capitalization is the amount of money it would cost you to buy every single share of stock a company had issued at the current market price.

It's calculated by multiplying the number of current shares outstanding by the current stock market price, and can be useful for comparing the size of one company to another.

There are certain benefits and risks associated with investing in companies of certain sizes, so investors may want to focus on a particular company size, like large-cap companies, or diversify by having small-, mid-, and large-cap companies in their portfolio.

Off the Charts

Inflation is in retreat, and people have noticed: Consumer sentiment jumped to an eight-month high in early January, buoyed by lower prices, according to the University of Michigan's Consumer Sentiment Index.