This week got off to an inauspicious start after the Justice Department served Federal Reserve chair Jerome Powell with a subpoena, threatening a criminal indictment.
In a highly unusual turn of events Powell gave a public statement and video where he accused the administration of political pressure and putting the independence of the Fed under threat.
Stocks shrugged off those concerns with the S&P 500 briefly making a new high before retreating. Markets saw continued rotation away from technology into small caps with the Russell 2000 index taking the lead.
Inflation data came in softer than expected with core consumer price inflation falling to 2.6% on an annual basis, while producer prices rose just 0.2% in November, and were flat excluding movements in the volatile food and energy categories.
Retail sales excluding autos rose 0.5% in November, ahead of the 0.3% forecast by economists. On a year-on-year basis, sales increased by 3.3%.
Meanwhile weekly jobless claims unexpectedly dropped to just 198,000, continuing the trend of muted layoffs.
The long-awaited Supreme Court decision on the legality of Trump’s tariffs still lingers as a potential risk for investors after a ruling did not come through on 14 January as some had anticipated.
Netflix
The battle to acquire Warner Bros Discovery has more twists and turns than an episode of Netflix’ smash hit Stranger Things.
This week Bloomberg News reported that Netflix is considering amending its $82.7 billion bid for Warner Bros to an all-cash offer to make it easier for certain shareholders to support the deal.
As a reminder, Netflix’s $27.75 per share offer is for Warner Bros’ streaming and studios division while rival bidder Paramount Skydance has offered $30 per share for the entire business including the legacy cable networks.
Frustrated by several rebuffed offers, Paramount chair and chief executive David Ellison, son of billionaire Larry Ellison, said his company was seeking the release of information on how the Warner Bros board valued the competing offers.
If Netflix wins the battle, it could have wide-ranging implications for the streaming landscape and the future of film and cinema.
A Netflix-Warner Bros tie-up could result in fewer theatrical releases and shorter release windows for blockbuster films.
Netflix shares have lost around a quarter of their value since the streaming giant announced its pursuit of Warner Bros in October 2025. The company is due to report earnings on 20 January after the market close.
US banks
The large banks reported strong fourth quarter earnings this week, but share prices were mixed due to lofty expectations already embedded in share prices and concerns over Trump’s proposal to introduce a 10% interest rate cap on credit cards.
It is therefore noteworthy that the pure investment banks Goldman Sachs and Morgan Stanley, which do not have credit card businesses saw their share prices rise.
Buoyant capital markets, strong merger and acquisition activity and a rejuvenated IPO (Initial public offerings) market all provided strong tailwinds which helped the banks beat analysts’ expectations.
The world’s largest bank JPMorgan Chase surprisingly reported a fall in fourth quarter profit, impacted by a $2.2 billion provision related to the takeover of Apple’s credit card partnership from Goldman Sachs.
Excluding the one-time charge the company generated a 12% increase in profit to $14.7 billion or $5.23 per share, ahead of analysts’ forecasts.
The one disappointment was a 5% fall in investment banking fees which missed the company’s own forecasts as well as analysts’ expectations.
Bank of America posted fourth quarter earnings ahead of analysts’ expectations with revenue climbing 7% to $28.53 billion and net income up 12% to $7.6 billion or $0.98 per share.
Citigroup delivered a 35% increase in adjusted earnings per share, the strongest among the major banks.
Delta Air Lines
Atlanta-based carrier Delta Air Lines saw its shares fall 4% on 13 January, despite fourth quarter earnings coming in ahead of expectations, after the company’s outlook disappointed.
The company projected 2026 adjusted earnings per share would land in the $6.5 to $7.5 range which fell shy of consensus estimates of $7.25. Still, that translates into roughly 20% earnings growth at the midpoint.
For the first quarter Delta is projecting revenue to grow between 5% and 7% with virtually all the growth driven by strong consumer and corporate demand for premium travel.
Delta has benefited from resilient demand from higher-income travellers as lower income consumers are pressured by sticky inflation and weaker spending power.
Commenting on the dual-speed economy CEO Ed Bastian said: “The lower-end consumer is struggling. We fortunately do not live there.”
Over the last 12-months the shares are up around 7% compared with a 17% increase in the S&P 500 index.
Martin Gamble: Shares and Markets Writer
Martin Gamble is Shares and Markets writer at AJ Bell. He was previously the Education Editor of Shares Magazine. He has been with the business since 2019.
Martin graduated from the University of Kent in...
