The S&P 500 (Index: SPX) experienced some geopolitical turmoil during the holiday-shortened trading week ending on Friday, 23 January 2026. The index plunged two percent on Tuesday, 20 January 2026 thanks to a one-two punch.

One of the punches was delivered by President Trump's weekend announcement he would impose new tariffs on European nations opposing his initiative to acquire Greenland from Denmark. That action had sent European stock prices lower before contributing to the U.S. stock market's drop. The good news here however is that by Thursday, the dispute was resolved and stock prices recovered.

The second punch was delivered by a developing crisis for Japan's economy. On Tuesday, 20 January 2026, the nation's new prime minister, Sanae Takaichi, announced plans for a snap election to secure a mandate for much higher government spending. That's a problem because Japan's central bank has been struggling to control inflation, which the new spending is expected to aggravate. The response by markets has been to send Japanese government bonds and its currency plunging, which has a global impact. This developing crisis has not yet been resolved.

In reaction to all this, and other market-moving news, the U.S. stock market rebounded, but not all the way. The S&P 500 closed out the week at 6,915.61, down 0.35% from its previous week's close.

It's not often we can point to geopolitical events as contributing anything more than noise to the trajectory of stock prices. The latest update of the alternative futures chart shows the S&P 500's trajectory is where it would be expected to be for investors focusing on the upcoming future quarter of 2026-Q2.

As for why, one major reason is provided by the CME Group's FedWatch Tool, which continues to project the Fed will hold the Federal Funds Rate steady until 17 June (2026-Q2), when it anticipates a 77% probability for a quarter point rate cut. The tool forecasts a better than 50% chance of another quarter point reduction on 28 October (2026-Q4).

As for what else influenced investor expectations for the future during the week that was, here are the week's market moving headlines:

Tuesday, 20 January 2026

• Signs and portents for the U.S. economy:
• Oil rises on Kazakh supply disruptions, upbeat economic data; Greenland in focus
• Trump's Greenland threat puts Europe Inc back in tariff crosshairs
• Trump says he will '100%' follow through on tariff threat - as it happened
• Trump promises ‘good’ Greenland plan; Europe pushes back - as it happened
• Fed minions job security to be determined by U.S. Supreme Court:
• Supreme Court tests limits of Trump's power over the economy
• Cook case could lead to 'cause' protections for Fed, or a roadmap for dismissals
• Bigger trouble, stimulus developing in China:
• China must strike right balance between demand and supply, says President Xi
• China hits 2025 GDP growth target on export boom, but can't shake domestic chill
• China can't make consumers buy goods, so it leans on services to drive economy
• As US orders fade, Chinese salespeople face tough grind in new markets
• China’s Trillion-Dollar Illusion
• BOJ minions signal more hikes to Japan's interest rates ahead:
• BOJ to signal more rate hikes as yen, politics fuel inflation risks
• Japan PM Takaichi to call Feb 8 snap election on spending, tax cuts and defence
• Buyers flee Japanese debt as Takaichi hits the ground spending
• Japan’s long-bond yields surge to record highs. Why it may be a problem beyond Tokyo
• Instant View: Japan bond yields soar as election promises stir fiscal fears
• ECB minions to get new Number Two minion, say new tariffs no big deal for Eurozone:
• Croatia's Vujcic nominated as ECB's next vice president
• Fresh tariffs to have muted inflation impact in Europe, ECB's Villeroy says
• European stocks drop the most in two months on Trump tariff threat over Greenland
• Nasdaq dropped over 2% as Wall Street closed deep in the red on geopolitical jitters
• Stock market today: Dow plummets 800 points, S&P 500, Nasdaq sink over 2% as Trump's Greenland threats clobber stocks
• Gold notches record above $4,700/oz, silver hits all-time high

Wednesday, 21 January 2026

• Signs and portents for the U.S. economy:
• Trump drops European tariff threat and announces framework Greenland deal - as it happened
• Trump signs order to limit Wall Street investors in single-family housing
• WTI oil prices fall as risks from Kazakh production halt subside
• US construction spending rebounds in October amid renovations
• US pending home sales plunge to five-month low in December
• Fed minions expected to hold rates steady until it gets new management:
• Fed to hold rates through March, and possibly through Powell's tenure - Reuters poll
• Trump says he may be down to one candidate to head the Fed
• Bigger trouble developing in Japan, calls for BOJ and JapanGov minions to stabilize currency:
• Exclusive: Japan should respond 'decisively' to bond selloff, opposition head says
• Japan's top labour union group urges government to stabilise forex
• ECB minions getting excited about digital currency:
• ECB's Panetta says banks will need to issue fully digital private money
• Wall Street rallied higher after Trump spoke at Davos and eased tariff concerns
• Wall Street ends higher as investors cheer Greenland framework deal, averted tariffs

Thursday, 22 January 2026

• Signs and portents for the U.S. economy:
• New trade map takes shape in Davos as world adjusts to Trump tariffs
• Silver rally strains global supply as retail demand surges across Asia
• US consumer spending rises, labor market remains in lackluster shape
• Trump's mortgage-backed bond purchases not moving needle on housing costs
• US third-quarter economic growth revised slightly higher
• Fed minions' future job security lies in Supreme Court decision, still not seeing getting inflation they predicted from tariffs:
• US Supreme Court sees risk in Trump running roughshod over Fed
• Fed's Favorite Inflation Indicator Refuses To Show Any Signs Of Runaway 'Trump Tariff' Costs
• Bigger trouble developing in China:
• China's rural banks struggle to sell seized properties despite hefty discounts
• Bigger exports developing in Japan, worry about U.S. trade policy; BOJ minions going through their options to deal with bond rout:
• Japan's exports up for fourth straight month, US dip clouds outlook
• Japan retains cautious economic view, flags risks from US trade policies
• What are Japan's policy options to soothe its bond rout?
• Small but rising opposition party warns BOJ raising rates too rapidly
• ECB minions think they've got everything covered with their monetary policy for the Eurozone:
• ECB in no hurry to change rates, comfortable with market bets, accounts show
• Wall Street finishes up as investors buoyed by tariff relief, upbeat data
• Wall Street finished higher as Greenland fears ease
• Gold tops $4,900/oz; silver and platinum extend record setting rally
• Speculative frenzy catapults silver above $100 an ounce
• Silver rally strains global supply as retail demand surges across Asia

Friday, 23 January 2026

• Signs and portents for the U.S. economy:
• Oil prices rise on Trump's Iran 'armada' comments and Kazakh outage
• Bigger trouble developing with China:
• US control of Venezuela oil risks debt restructuring showdown with China
• BOJ minions say they're really worried about inflation but hold Japan's interest rates steady, try to keep currency from collapsing, Japan's economy sees growth signs:
• Japan's core inflation slows in December but stays above BOJ goal
• BOJ keeps rates steady, raises growth and inflation forecasts
• BOJ signals more hikes in hawkish tilt, warns of action against yield spike
• Yen choppy on intervention jitters after BOJ strikes hawkish tone
• Japan's factory activity returns to growth after seven months, PMI shows
• Eurozone minions back down, ECB minions perfect monetary policies to be potentially challenged by new inflation:
• EU to suspend 93 billion euro retaliatory trade package against US for 6 months
• Euro zone business activity expands steadily but price pressures reemerge
• Dow ends lower after topsy-turvy week, as Intel's outlook weighs on market sentiment
• Wall Street ended mixed as turbulent week concluded with Intel earnings
• Intel tumbles as analysts weigh in on supply constraints, gross margin concerns

The Atlanta Fed's GDPNow toolestimate of real GDP growth in the U.S. during 2025-Q4 gained a tick, rising to +5.4% from the +5.3% growth it projected a week earlier.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Wall Street bull and bear, both wearing suits, watching the Geopolitical Pendulum swinging between one side that says 'Good for stocks' and the other that says 'Bad for stocks'". Which we followed up with a request to "Make the cartoon more colorful".