Stocks dip as risk stays up to close whipsaw week

January 23, 2026

Joe Mazzola, Head Trading & Derivatives Strategist at Charles Schwab, reviews a volatile end to the week as stocks remain under pressure and risk measures stay elevated.

A wild week of sharp dips and rallies approached its end with stocks under pressure and risk measures still elevated. Next week features the Fed and mega-cap earnings.

(Friday market open) As a massive winter storm took aim at the East Coast, stocks retreated early Friday while risk measures remained elevated despite Wall Street’s recovery from Tuesday’s sell-off. Gold hit a fresh record high overnight, volatility climbed, and the dollar stayed near recent lows. All this suggests market participants don’t believe this week’s other storm—the geopolitical one—has completely faded. It also didn’t help that shares of Intel (INTC) tumbled 13% on disappointing guidance.

Investors stand at the precipice of the busiest two weeks of the quarter. Next week features a Federal Reserve meeting, several Treasury auctions, and earnings from mega caps. Washington is also in focus after the House passed its remaining appropriations bills yesterday, making a shutdown less likely. “Getting all 12 appropriations bills passed by the January 30 deadline now seems virtually assured, though things can still go sideways in the Senate,” said Michael Townsend, managing director of legislative and regulatory affairs at Schwab. “But it’s a notable development in the wake of last fall’s acrimonious, record-long 43-day government shutdown. Neither party wanted a repeat of the shutdown.”

Major indexes had another solid day Thursday, led by the “big three” sectors: communication services, consumer discretionary, and info tech. These include all the Magnificent Seven stocks, six of which report over the next two weeks. The market’s quick comeback from Tuesday’s “sell America trade” suggests retreats continue to be bought. “Buy the dip mentality is still alive and well,” said Liz Ann Sonders, chief investment strategist at the Schwab Center for Financial Research (SCFR).

Three things to watch

Yields remain elevated even as tensions cool: Despite easing concerns of international investors selling U.S. assets, the benchmark 10-year Treasury note yield stays elevated at 4.24%. Though it’s possible yields could return to the previous range below 4.2%, it wouldn’t be surprising to see them retest Tuesday’s 4.3% high, or even move above that, based on economic and political trends. Several Treasury auctions loom next week and could help set the pace. “I believe longer-term yields have more upside than downside,” said Cooper Howard, director of fixed income research and strategy at SCFR. “Geopolitical concerns, elevated inflation, less Fed rate cuts because the economy holds up, and higher budget deficits are all reasons yields could remain elevated in the near-term.” Historically, higher yields can hurt stocks by raising the cost of consumer and corporate borrowing. In addition, higher yields can compete with stocks for investor funds. Yesterday’s November Personal Consumption Expenditures (PCE) Price Index data came in as expected at 0.2% month over month and didn’t have much impact on yields.
Chip sector navigates Intel’s guidance disappointment: Shares of Intel slid 13% in early trading after the company reported better-than-expected quarterly earnings and revenue but first quarter guidance that fell short of analysts’ hopes. Intel said in its press release that it’s navigating industry-wide supply shortages it expects to bottom out in the first quarter. Several analysts raised their price targets on Intel after its earnings, saying the supply bottleneck appears temporary but could dilute gross margin. Despite Intel’s struggles, semiconductor shares generally enjoyed gains early Friday and are up around 1.5% for the short week. Leaders today included Arm Holdings (ARM), Super Micro Computer (SMCI), Advanced Micro Devices (AMD), Taiwan Semiconductor Manufacturing (TSM), and Nvidia (NVDA), all rising 1% or more before the opening bell. This came as Bloomberg reported that China’s government advised tech firms there to prepare orders for Nvidia’s H200 chip.
Volatility retreats but futures still in contango: Though the Cboe Volatility Index (VIX) fell late this week to below 16 from Tuesday’s two-month high near 21, the futures market remains in contango, meaning longer-term prices trade at a premium to near-term ones. Market participants anticipate another test of 20 in coming months. VIX is known as the “fear” index—with upward moves historically indicating investor caution—but recently it appears “retail investors see volatility spikes as opportunities,” Sonders said. The charts appear to bear that out recently, as a rally in the Nasdaq-100^® (NDX) followed November’s VIX surge and stocks rallied again this week after the spike in VIX. That said, correlation isn’t causation. For retail traders, remember that elevated volatility widens the ranges of outcomes and improves reward-to-risk, Sonders said, but also raises the cost of error. “Fast-moving markets often punish overconfidence,” she added.

On the move

Capital One (COF) fell 4% early Friday after the company missed Wall Street’s earnings per share estimates. Revenue was in line.
Rare earth stocks continued surging Friday to cap a solid week as geopolitical tensions simmer. Hecla Mining (HL) rose nearly 3% in early trading while USA Rare Earth (USAR) climbed 6.5%.
Spotify (SPOT) jumped 1.75% this morning after getting an upgrade to buy from Goldman Sachs, which sees a “more compelling risk/reward” scenario.
Boeing (BA) rose more than 1% to a new 52-week high Thursday ahead of its earnings report next week. Though the company is expected to report another loss, analysts now see a chance of profitability returning in the first or second quarters, Briefing.com noted, as aircraft deliveries trend higher.
Meta Platforms (META) rose 5.4% Thursday in what might have been a technical move after the stock plumbed two-month lows earlier this week.
The small-cap Russell 2000^® Index (RUT) outpaced the S&P 500 index for the 15th straight session Thursday, the longest stretch since 1996. Strength in small caps can reflect positive investor sentiment about the domestic economy.
Market breadth, an important equity market health check, remained near recent highs Thursday with 68% of S&P 500 stocks trading at or above their respective 50-day moving averages, down just slightly from last week’s multi-month peak above 70%. Wider breadth can signal a healthier rally where a rising tide lifts many boats.
As of late Thursday, just over 10% of S&P 500 companies had reported, with 61% beating estimates on the top line and 82% on the bottom line, according to Bloomberg. Average annual revenue growth was 7.18%, while year-over-year earnings per share growth was 17.1%. FactSet delivers its weekly earnings update around midday today, with new estimates for overall fourth-quarter earnings growth. Its blended earnings per share estimate last week was 8.2% including both companies already reporting and estimates for those to come.
Bitcoin (/BTC) slipped 0.2% early Friday and remained shy of the $90,000 level, a key psychological mark.
Trading volume at the New York Stock Exchange (NYSE) was higher than average and advancers outpaced decliners the last two sessions as the market rallied. These can be signs of a rally with widespread conviction.