President Donald Trump continues to try to shake things up as the second year of his current term gets underway. In January, he proposed a one-year cap on credit card interest of 10%. This is part of his push for better affordability for Americans. The administration is clearly issuing a warning to certain businesses within the financial services sector. Investors in these two S&P 500 (SNPINDEX: ^GSPC) stocks shouldn't worry, though. Will AI create the world's first trillionaire? Our team just released a r ...

Group 1: Microsoft - Microsoft is a leading tech company with a market cap of $3.1 trillion, experiencing a recent stock decline despite a 17% revenue growth in the last quarter of 2025 [4][6] - The Azure cloud business showed a growth rate of 39%, slightly below the expected 39.4%, which contributed to investor disappointment [4] - The company reported a profit of $38.5 billion, up from $24.1 billion a year ago, indicating strong financial health [7] - Microsoft has a dividend yield of 0.9% and recently announced a 10% increase in its dividend [8] Group 2: American Express - American Express generated $72.2 billion in revenue for 2025, reflecting a 10% year-over-year increase, driven by strong card member spending [9] - The company forecasts a revenue growth rate of 9% to 10% for 2026, despite concerns over potential caps on credit card interest rates [10] - American Express has a market cap of $247 billion and a dividend yield of approximately 0.9%, with plans to increase its payout by 16% this year [12]

Core Insights - Credit card issuers, including Visa and American Express, report strong consumer spending in the last quarter of 2025, indicating a positive outlook for the upcoming holiday season for retailers [1] Group 1: Company Performance - Visa and American Express have demonstrated robust earnings, suggesting that consumer spending remains resilient and is growing at a healthy rate [1] Group 2: Industry Implications - The positive earnings reports from credit card companies signal a strong holiday season ahead for retailers, as consumer confidence and spending are expected to continue [1]

Core Viewpoint - American Express (AXP) has shown strong performance in recent years, but concerns about potential caps on interest rates may limit future gains [1][7]. Company Performance - American Express has been one of the best-performing financial stocks, with a stock price increase of over 210% in the past five years, significantly outperforming the S&P 500's 81% gain during the same period [2]. - The company's growth rate has been declining but remains positive, with current growth around double digits, indicating resilience amid economic challenges [4]. Valuation Metrics - The stock is currently trading at a price-to-earnings (P/E) multiple of 24, which is lower than the S&P 500 average of 27, suggesting that the stock may still have room for growth [6]. - The market capitalization of American Express is $246 billion, with a gross margin of 61.04% and a dividend yield of 0.92% [8][9]. Legislative Concerns - Year-to-date, American Express's stock has fallen by 2% due to concerns over proposed legislation that would impose a 10% cap on credit card interest rates, which could impact growth prospects [7]. - If the legislation passes, it may require American Express to be more cautious in extending credit, potentially affecting its financial performance [9]. Investment Outlook - Despite potential short-term challenges due to legislative uncertainty, American Express is viewed as a solid long-term investment due to its strong brand, consistent growth, and attractive valuation [10].

Market Overview - The U.S. stock market opened on January 12, 2026, with major indexes experiencing early declines due to a criminal probe involving Federal Reserve Chair Jerome Powell and a new policy proposal from President Donald Trump [1][3] - The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) had previously reached record highs following positive unemployment data [1] Major Index Performance - The S&P 500 opened at 6,944.12 points, down 0.32% from the previous close, while the DJIA opened at 49,499.67 points, down 0.01% [2] - The Nasdaq Composite opened lower at 23,576.88 points, down 0.40% [2] - Early trading saw the Dow decline approximately 400 points, a 0.3% drop, with the S&P 500 down 0.1% and the Nasdaq Composite slipping less than 0.1% [2] Key Market Catalysts - The U.S. Department of Justice has initiated a criminal probe into Jerome Powell, raising concerns about the independence of the Federal Reserve [3] - President Trump's proposal for a one-year cap on credit card interest rates at 10% negatively impacted financial stocks, with Synchrony Financial and Capital One Financial dropping approximately 8% and 6% respectively [4] Safe-Haven Assets - Gold futures surged to $4,605 an ounce, up 2.4%, as investors sought refuge amid market turbulence and geopolitical risks [5] - Crude oil prices edged lower, with West Texas Intermediate futures down 0.5% to $58.85 a barrel [5] Upcoming Economic Data - Key economic data releases include the U.S. Consumer Price Index (CPI) on January 13 and the Producer Price Index (PPI) on January 14 [7][8] - The Federal Reserve's monetary policy remains a focus, with analysts anticipating a pause in rate cuts at the upcoming FOMC meeting [8] Earnings Releases - Microsoft is scheduled to release its fiscal year 2026 second-quarter financial results on January 28, 2026 [9] - Other companies reporting earnings on January 12, 2026, include WaFd Inc, Platinum Group Metals, Lifecore Biomedical, and Loop Industries [9] Individual Stock Movements - Intel Corporation shares surged by 10.8% following a positive social media post from President Trump [10] - General Motors Company experienced a 0.3% dip after announcing $7.1 billion in special charges for restructuring [11] - Walmart shares advanced 2% due to its inclusion in the Nasdaq 100 index starting January 20 [10]

Market Overview - US stock futures declined, with Dow Jones Industrial Average futures down 0.7%, S&P 500 futures down 0.6%, and Nasdaq 100 futures down approximately 0.9% amid concerns over Federal Reserve independence following a criminal investigation into Chair Jerome Powell [1][2] - The dollar fell by 0.3%, marking its largest drop in nearly three weeks, as the Federal Reserve faced grand jury subpoenas from the Justice Department [17][18] Federal Reserve and Political Pressure - Powell stated that the Justice Department's subpoena is an escalation of President Trump's campaign to pressure the Fed into cutting interest rates, emphasizing that the Fed sets rates based on public service rather than presidential preferences [2][3] - Concerns over political interference in monetary policy have intensified, contributing to a rise in gold prices and a decline in the dollar [4] Upcoming Economic Data - Investors are preparing for updates on inflation, with consumer inflation data due on Tuesday, and producer prices and retail sales scheduled for Wednesday [5][8] - The market is largely pricing in no rate cut from the Fed this month, following a December jobs report indicating a cooling labor market without a sharp economic slowdown [5] Corporate Earnings and Market Reactions - Major banks are set to report earnings this week, with expectations of a record year for the industry and a projected 8.3% annual profit growth for S&P 500 firms [9][10] - Capital One shares fell 10% after Trump warned credit card issuers they would be in violation of the law if they did not cap interest rates at 10% [7][14] Geopolitical Developments - Markets are also monitoring unrest in Iran and potential military action from the US, which has led to fluctuations in oil prices as investors assess the impact on crude supply [6]

Core Insights - JPMorgan Chase is taking over the Apple Card from Goldman Sachs, marking a significant shift in the management of Apple's credit card portfolio valued at approximately $20 billion [1][11] - The transition is expected to take about two years, with JPMorgan planning to move the card balances to its retail banking platform, pending regulatory approvals [2][11] - The deal concludes over a year of speculation regarding which financial institution would assume control of Apple's credit card business [4][11] Company and Industry Analysis - Apple has maintained its focus on consumer-oriented financial services, with its digital wallet services leading the market, despite fluctuations in its card portfolio since 2023 [3] - The Apple Card portfolio is estimated to represent around $21 billion in receivables and could generate about $100 billion in payment volume, which is roughly 1% of Mastercard's volume and 75 basis points of Visa's volume [8] - JPMorgan is preparing for potential credit losses by logging a $2.2 billion provision in the fourth quarter of 2025, following a $3.4 billion provision in the third quarter, which included $600 million related to card services [7][11] - The Apple Card has shown impressive growth, with a compounded annual growth rate (CAGR) of over 53% from 2019 to 2021, and a subsequent CAGR between 31% and 42%, significantly outpacing the top 10 credit card issuers [10] - Nearly 40% of Apple Card owners had an annual income of $100,000 or more in 2023, indicating a customer base with substantial spending power [12] - JPMorgan's card business has been expanding steadily, adding 10 million new accounts annually from 2022 to 2024, with a 12% increase in net revenue from card services in the third quarter compared to the previous year [13]

Group 1 - The potential elimination of America's $18 trillion-plus credit card debt could have significant implications for the economy and various consumer groups [1][2] - Households with high credit card balances would experience immediate financial relief, benefiting lower- and middle-income Americans the most [4] - The economy could see a temporary boost from increased consumer spending, particularly in sectors like retail, restaurants, travel, and home goods [5] Group 2 - Small businesses are likely to benefit from increased consumer spending, leading to potential growth and hiring opportunities [6] - Banks and credit card issuers would face substantial losses due to the elimination of interest fee income, which could negatively impact their profits and stock market valuations [7]

Market Overview - The stock market rebounded this week with the S&P 500 and Nasdaq increasing by 1.7% and 2.1% respectively after previous losses of over 2% [1] - Concerns about U.S.-China trade, the federal government shutdown, and regional bank credit quality influenced market fluctuations [1] Financial Sector Performance - Zion and Western Alliance disclosed bad loans, leading to a selloff in financial stocks, with Zion and Western Alliance shares dropping 13% and nearly 11% respectively [1] - Capital One, a credit card issuer, fell 5.5% on Thursday but rebounded 4% the following session, reflecting market volatility [1] - Wells Fargo reported a strong third quarter, beating both top and bottom-line estimates, and raised its ROTCE target from 15% to 17%-18% [1] - Goldman Sachs achieved record third-quarter revenue with a 42% increase in investment banking fees compared to last year, although shares fell 1.8% for the week [1] - BlackRock reported better-than-expected results, with shares rising 2.5% for the week, and announced a new money market fund compliant with the GENIUS Act [1] Company-Specific Developments - Abbott Laboratories had another disappointing quarter, leading to a price target reduction from $145 to $140 and a downgrade to a 3 rating [1] - DuPont announced a spinoff of its electronics business Qnity, with shares jumping 8% for the week, and is trading at a 38% discount to its estimated sum of parts [2] - Honeywell will spin off its Solstice Advanced Materials unit, with a 1% weekly advance in its stock [2] - Salesforce shares gained during Dreamforce week, with a forecast of $60 billion in annual revenue for fiscal year 2030, exceeding market expectations [2]

Core Insights - American Express reported record quarterly revenue driven by strong spending from affluent consumers, with shares rising approximately 15% in 2025, slightly outperforming the S&P 500 [1][5]. Financial Performance - The company announced third-quarter earnings per share of $4.14, with revenue increasing 11% year-over-year to a record $18.43 billion, surpassing analysts' expectations [2]. - American Express raised the lower end of its full-year earnings per share outlook to $15.20 to $15.50, up from a previous range of $15 to $15.50, and projected revenue growth of 9% to 10% compared to the earlier estimate of 8% to 10% [2][7]. Market Reaction - Following the earnings announcement, American Express shares surged over 6% to around $343, positioning them to close at a record high [3]. Economic Context - The results highlight a trend where the economy is increasingly influenced by the spending habits of wealthy Americans, who are benefiting from stock market gains [4]. - The CEO noted that the launch of updated high-end credit cards contributed significantly to the strong performance, with demand and engagement exceeding expectations [4].