Two Key Catalysts With Potential to Stir Markets

by Larry Adam of Raymond James, 1/27/26

Key takeaways

  • The Fed is widely expected to hold rates steady next week
  • Market breadth is off to a strong start to the year; tech giants are lagging
  • Tech fundamentals remain strong, despite lagging performance YTD

A major winter storm is set to sweep across the country this weekend, bringing heavy snow, dangerous ice and bitter cold to more than 175 million Americans from central Texas all the way to the Northeast. With that many people in the storm’s path, power outages and travel headaches could linger for days before things slowly return to normal.

Markets, interestingly enough, felt their own version of a “deep freeze” this week. Geopolitical flare-ups, fresh tariff threats and a mini-meltdown in Japan’s bond market briefly rattled investors and pushed volatility sharply higher.

Conditions did stabilize by week’s end, helped by President Donald Trump softening his tariff rhetoric and Japanese yields recovering part of their steep slide, but the atmosphere remains fragile. Plenty of potential catalysts are still out there, any of which could stir markets back up. With that backdrop in mind, here are the two key areas we’re watching closely in the week ahead:

Powell’s press conference and upcoming leadership transition

After three straight rate cuts last year, the Federal Reserve is widely expected to keep interest rates unchanged at next week’s meeting (January 27–28). We may see another dissent (in favor of an additional cut) from Governor Miran before his term ends on January 31, but the real focus will be on Chair Jerome Powell’s press conference.

  • Rate outlook: Investors want to know whether this will simply be a one-meeting “pause” or the beginning of a longer hold. Right now, the economy still looks surprisingly sturdy. The Atlanta Fed’s GDPNow model has fourth-quarter growth tracking at a strong 5.4%. The job market remains steady, with weekly jobless claims hovering near 200,000 and continuing claims actually declining. And importantly, inflation continues to come in better than expected, defying predictions of a tariff-driven surge. With tax season approaching, expectations for larger than usual refunds could also add more fuel to consumer spending. All of that has pushed market expectations for the next rate cut out to July. That said, the data has been unusually noisy, partly because of the recent government shutdown, which makes the timing of the Fed’s next move even more dependent on what incoming numbers show. We still expect one rate cut this year, but the path to get there is less clear than usual.
  • Will Powell stay or go?: This meeting also kicks off the final stretch of Chair Powell’s tenure – he’ll likely preside over just three more meetings before his chairmanship ends May 15. Markets will be listening closely for any hints about his long-term plans: Will he stay on the Fed board for the remaining two years of his full term or step aside entirely? Powell is almost certain to deflect those questions, but betting markets still assign a roughly 70% chance he leaves the Fed by year-end, which would give President Trump another opportunity to reshape the central bank. As for who might replace him as the next chair, former Fed Governor Kevin Warsh remains the front-runner, with BlackRock’s Rick Rieder emerging as a close contender. Whoever ultimately gets the job, the Fed’s design – with staggered terms and limits on how much any one person can influence policy – helps preserve the institution’s independence.