Investing.com -- U.S. stocks ended Friday mixed, with the Nasdaq Composite extending its advance as geopolitical tensions eased, while the Dow Jones Industrial Average lagged.
The Nasdaq rose 0.28% to 23,501.24, supported by gains in large-cap technology shares. The Dow fell 285.30 points, or 0.58%, to 49,098.71, pressured in part by a near 4% drop in Goldman Sachs. The S&P 500 edged up 0.03% to 6,915.61.
But markets began recovering midweek after President Donald Trump scrapped plans to impose tariffs on imports from eight European nations that were due to take effect Feb. 1. He also said he had reached a “framework of a future deal” with NATO Secretary General Mark Rutte regarding Greenland, helping to calm investor nerves.
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While gains on Wednesday and Thursday had erased earlier losses for the Dow, Friday’s pullback pushed the index back into negative territory for the week. The Dow fell about 0.5% over the period, while the S&P 500 slipped roughly 0.4%. The Nasdaq was little changed, posting a decline of less than 0.1%.
This week, attention will turn to the just-begun fourth-quarter earnings season and the Federal Reserve’s policy meeting. The central bank is widely expected to leave interest rates unchanged when it delivers its decision Wednesday, following three consecutive quarter-point cuts in late 2025.
Traders are still pricing in at least one additional rate reduction later this year, according to LSEG data. Meanwhile, President Trump is weighing a nominee to succeed Fed Chair Jerome Powell, whose term ends in May, with an announcement potentially coming soon.
Attention turns to megacap tech earnings
Investors this week are likely to pivot from geopolitical developments toward corporate results, with a heavy slate of earnings reports set to come in.
Roughly one-fifth of S&P 500 companies are due to report in the coming days, including Apple, Microsoft, Meta Platforms and Tesla.
Early results have been broadly positive, with about 81% of companies that have reported so far beating profit expectations. Fourth-quarter earnings for the S&P 500 are now projected to have risen 9.1% from a year earlier, according to LSEG, with profit growth expected to exceed 15% in 2026.
A key question for markets is whether companies are beginning to see tangible returns from heavy investment in AI. Concerns over the payoff from large-scale spending on data centers and related infrastructure weighed on AI-linked stocks late last year, after the sector had been a major driver of the prolonged rally in U.S. equities.
"Tech enters 4Q25 earnings season with among the most downbeat sentiment of the AI Bull market, despite pockets of strength – a sharp contrast to sentiment into the prior quarter," Evercore ISI strategists led by Julian Emanuel said in a note.
Apart from the megacap tech giants, other high-profile companies scheduled to report earnings this week include Boeing, GM, IBM, Mastercard, and Visa, among others.
What analysts are saying about U.S stocks
Morgan Stanley: "Earnings season is likely more of a stock-specific catalyst than an index-level driver."
"In the U.S., look for a strong EPS beat rate alongside elevated performance dispersion this earnings season. Meanwhile, small caps snapped their historic outperformance streak, but resilient fundamentals remain intact."
Evercore ISI: "Despite (or because of) the fact that the Tech/AI centric sectors have been driven almost entirely by EPS growth in this Bull Market … … Info Tech is trading at its lowest NTM valuation premium to the S&P 500 in the post-Pandemic environment. Drilling down even further, Mag7 P/E is in-line with its post-Pandemic average, while the “other 493” stocks in the S&P 500 trade near their all-time high valuations."
Goldman Sachs: "To capitalize on the broadening tailwind from an economic acceleration in early 2026, we continue to recommend select consumer stocks, companies with exposure to nonresidential construction, and small-caps as opportunities. The equal-weight S&P 500 also benefits from this dynamic, but it has less economic sensitivity than our recommended strategies. Among SMID-caps, following the strong returns of the Russell 2000, valuations appear more attractive for the S&P MidCap 400 and SmallCap 600."
