NEW YORK, Jan 18, 2026, 12:02 PM EST — Market closed
- Dow dropped 83 points Friday; U.S. markets will be closed Monday for MLK Day holiday
- Trump threatened to hike tariffs on eight European countries unless the U.S. secures a deal to purchase Greenland
- Investors are bracing for a packed week ahead, with earnings from Dow components, PCE inflation figures, and a Supreme Court case linked to the Fed all on the docket
President Donald Trump announced on Saturday that he plans to impose rising tariffs on eight European allies if the U.S. isn’t permitted to buy Greenland, a weekend development that could dampen risk appetite when Wall Street opens. 1
The Dow Jones Industrial Average closed Friday down 83.11 points, or 0.2%, at 49,359.33. The S&P 500 and Nasdaq also slipped slightly. Gains in major tech stocks helped balance out losses elsewhere as investors absorbed mixed bank earnings. 2
U.S. markets remain closed Monday in observance of Martin Luther King Jr. Day, extending the trading break until Tuesday. 3
Global markets were set for a shaky reopening, with IG market analyst Tony Sycamore predicting a “risk-off” stance — investors favoring safe havens over equities. 4
Major EU countries condemned the tariff threat on Sunday and debated potential responses, including deploying the bloc’s “Anti-Coercion Instrument,” which can hit trade, investment, or public tender access. Denmark’s Prime Minister Mette Frederiksen declared: “Europe will not be blackmailed.” 5
Ireland’s Prime Minister Micheal Martin warned that the EU would strike back if the tariffs are implemented, noting that the situation has escalated “very dramatically, very quickly.” 6
Investors face risks beyond trade tensions. On Jan. 21, the U.S. Supreme Court will hear a case linked to Trump’s bid to fire Federal Reserve Governor Lisa Cook. Legal experts warn this fight could challenge the Fed’s independence. Kathryn Judge, a professor at Columbia Law School, argued that executive power is “not unbounded.” 7
Federal Reserve Vice Chair Philip Jefferson indicated the central bank is comfortable keeping rates unchanged, describing the current policy as “well positioned” to assess when to act next. The benchmark interest rate remains between 3.50% and 3.75%, with markets assigning just a 5% probability of a cut at the January 27-28 meeting. 8
The biggest inflation gauge this week arrives Thursday, when the Bureau of Economic Analysis puts out the Personal Consumption Expenditures price index. This measure is the Fed’s favorite since it reflects both consumer spending and prices. The data drops just days ahead of the Fed’s Jan. 27-28 policy meeting. 9
Earnings could steer the Dow’s daily swings despite the bigger macro news. 3M is slated for its Q4 earnings call Tuesday morning, followed by Johnson & Johnson and Travelers on Wednesday morning. Procter & Gamble wraps up the week with its call on Thursday morning, per company investor calendars. 10
This week could shift fast. Should tariff threats solidify into actual policy, or if Europe retaliates with countermeasures, exporters and multinationals would likely face the initial blow. Plus, with liquidity thin after the holidays, market swings might get amplified.
Traders get their first clear signal when U.S. stocks reopen Tuesday, with earnings from Dow components rolling in ahead of Thursday’s PCE inflation report. Wednesday brings a Supreme Court hearing related to the Fed. After that, all eyes turn to the Fed’s rate decision on Jan. 27-28.
