New York, January 25, 2026, 13:22 EST — Market closed.
Communication services stocks kicked off the week with their key sector gauge nudging up, despite investors gearing up for a heavy slate of corporate reports. The Communication Services Select Sector SPDR ETF (XLC) climbed 0.6% to $116.96.
The modest shift conceals just how concentrated this group is now. State Street Global Advisors reports Meta Platforms accounts for around 19.7% of XLC, with Alphabet’s A and C shares combining for about 20.5%. That leaves the ETF heavily exposed to just a few megacaps. (State Street)
After a January marked by sharp geopolitical moves, investors seem ready to refocus on earnings and interest rates, Reuters noted. Yung-Yu Ma, chief investment strategist at PNC Financial Services Group, described recent market swings as “a little bit of a short but steep roller-coaster ride.” Chris Galipeau of Franklin Templeton was more direct: “at the end of the day, earnings are the driver.” (Reuters)
Friday’s trading reinforced one clear message. “In a ‘show-me’ phase, revenue growth has to back up the stock rally,” Julian McManus, portfolio manager at Janus Henderson, told Reuters. (Reuters)
The sector’s largest players finished unevenly. Meta gained 1.7%, but Alphabet dropped 0.8%, leaving the group with broad gains overall. Netflix jumped 3.1%, Disney declined 2.0%, Verizon and T-Mobile edged up slightly, and AT&T stayed flat. The S&P 500 proxy SPY barely moved, while the Nasdaq-tracking QQQ rose roughly 0.3%.
Meta announced it will cut off teenagers’ access to its current AI characters on all its apps worldwide while it works on an upgraded version. The company said, “Starting in the coming weeks, teens will no longer be able to access AI characters across our apps until the updated experience is ready.” In a separate development, a smartglasses maker filed a lawsuit against Meta and EssilorLuxottica, alleging the companies copied its technology for their own wearable products. (Reuters)
Alphabet’s Waymo found itself under regulatory scrutiny again. The U.S. National Transportation Safety Board launched an investigation after reports that Waymo robotaxis illegally passed stopped school buses in Austin, Texas, according to Reuters; Waymo responded by saying it is “confident that our safety performance around school buses is superior to human drivers.” (Reuters)
Netflix grabbed headlines amid the ongoing clash with Warner Bros Discovery. Co-CEO Greg Peters dismissed Paramount’s offer as one that “doesn’t pass the sniff test,” the Financial Times reported. He also told Reuters there was “no chance in hell” the deal could succeed without outside financing. (Reuters)
The downside scenario is straightforward. Should ad demand or guidance fall short at the megacaps, or regulators clamp down harder on AI products and autonomous vehicles, the sector’s heavy concentration could quickly shift from a boost to a drag.
The next major earnings reports are lined up. Meta will reveal its results after the close on Wednesday, Jan. 28; AT&T follows with its fourth-quarter numbers that same day. Comcast steps in on Thursday, Jan. 29, and Verizon rounds out the week on Friday, Jan. 30. Alphabet’s quarterly results are due Feb. 4. (Meta Investor)
