WASHINGTON, January 15, 2024 – Investors are bracing for a busy week, with key inflation data, the start of fourth-quarter earnings season, a Supreme Court ruling on tariffs, and the World Economic Forum in Davos all set to move markets. The core PCE price index, the Federal Reserve’s preferred measure of inflation, will be released on Thursday and is expected to heavily influence investor sentiment.
Earnings Season Kicks Off Amid Economic Uncertainty
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A mixed bag of corporate reports and geopolitical tensions are expected to fuel market volatility in the days ahead.
- GE Aerospace is poised for a potential rally fueled by strong earnings expectations.
- United Airlines faces headwinds as it prepares to report its fourth-quarter results.
- The core PCE price index, due out Thursday, will be a critical data point for gauging inflation.
- President Trump’s potential tariffs on NATO members and a Supreme Court ruling on existing tariffs add to geopolitical uncertainty.
U.S. stocks closed lower on Friday, ending the week with modest declines for the Dow Jones Industrial Average, S&P 500, and Nasdaq. The pullback came as traders digested recent comments from President Trump regarding the Federal Reserve and global political developments. For the week, the Dow fell 0.3%, the S&P 500 declined 0.4%, and the Nasdaq Composite shed 0.7%. However, the small-cap Russell 2000 bucked the trend, jumping 2% to reach a new record closing high on Friday.
President Trump announced on Saturday that eight NATO members could face escalating tariffs of up to 25% unless an agreement is reached for the U.S. to purchase Greenland.
U.S. markets will be closed Monday in observance of the Martin Luther King Jr. holiday. Beyond the economic calendar, investors are awaiting a decision from the U.S. Supreme Court on the legality of President Trump’s global tariffs, a ruling that was postponed last week. The court will also hear arguments concerning Trump’s attempt to remove Fed Governor Lisa Cook.
The fourth quarter earnings season is now underway, with reports anticipated from major companies including Netflix (NASDAQ:NFLX), Intel (NASDAQ:INTC), United Airlines (NASDAQ:UAL), Procter & Gamble (NYSE:PG), Johnson & Johnson (NYSE:JNJ), GE (NYSE:GE), and 3M Company (NYSE:MMM).
Stock to Buy: GE Aerospace
GE Aerospace is expected to deliver a strong earnings report this week, potentially sparking a rally. Analysts predict a solid quarter driven by robust demand in the aerospace sector and a surge in new engine orders, including a recent order from Delta for GE’s GEnx engines for its new 787 fleet.
The company’s Q4 update is scheduled for release before market open on Thursday at 6:30 AM ET. Options markets suggest a potential stock swing of +/-5.2% following the announcement. Analysts are forecasting adjusted earnings per share of $1.44, up from $1.32 a year ago, and revenue growth of around 13% year-over-year to $11.2 billion. This growth is fueled by strong demand for LEAP and GEnx engines, which are currently sold out through the decade, and increasing engine deliveries.
Investors will be closely monitoring GE Aerospace’s forward guidance alongside the headline results. Recent positive developments, including new orders and expansions, reinforce optimism for 2026, with analysts projecting earnings per share growth to around $7.01 for the full year.
The company, a leading provider of jet engines and aerospace systems, continues to benefit from the recovery in air travel and strong demand for aftermarket services. GE Aerospace’s stock has soared 78.8% over the past year and is currently just 2.3% below its 52-week high, supported by a “strong buy” signal across all technical timeframes.
Trade Setup:
- Entry: $326 (pre-earnings)
- Targets: $340 → $350 (gain ~5%-7%)
- Stop: $315 (risk ~3%)
Stock to Sell: United Airlines
United Airlines is facing increasing challenges as it approaches its Q4 earnings release on Tuesday at 4:00 PM ET. While the airline has demonstrated resilience in previous quarters, current consensus suggests potential for a miss or a muted market reaction.
Implied volatility indicates a potential stock move of +/-5.9% in either direction following the earnings report, highlighting the risk of a negative surprise. Wall Street analysts expect the Chicago-based airline to report earnings of $2.96 per share, a 9.2% decline from last year’s $3.26. Revenue is projected to be around $15.4 billion, but pressures from rising operational costs, capacity constraints, and ongoing disruptions, particularly in international operations, weigh on the outlook.
The airline industry continues to grapple with operational challenges, including flight delays, cancellations, and capacity limitations. The potential for new tariffs on European routes adds further complexity to United’s international operations, as trade tensions and retaliatory measures could impact its transatlantic network.
Technical indicators suggest increased risk: UAL’s 1-hour indicators point to a “strong sell” signal, with momentum and moving averages trending downward. Even if the headline numbers meet expectations, a cautious outlook or increased pressure on key international segments could send the stock lower.
Trade Setup:
- Entry: $113.50 (pre-earnings weakness)
- Targets: $105 → $95 (gain ~7.5%-16%)
- Stop: $120 (risk ~5%)
Disclosure: This is not financial advice. Always conduct your own research.
At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF, and the Invesco QQQ Trust ETF. I am also long on the Technology Select Sector SPDR ETF. I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies’ financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.
