The Market Update with EP Wealth Advisors Managing Director, Investments -
Adam Phillips, CFA^®, CAIA, CFP^®

Often quoted in major national media, Adam is a Chartered Financial Analyst (CFA^®), a CERTIFIED FINANCIAL PLANNER™ (CFP^®), and has been included on the Forbes NextGen Best-in-State Wealth Advisors 2019 list. He is a member of the CFA Society of Los Angeles and the CFA Institute. Adam helps establish asset allocation strategy as a member of the EP Wealth Investment Committee, which supports all EP Wealth Advisors and their clients. The Committee’s top-down approach to portfolio construction begins with an outlook on the economy’s likely direction, followed by the implications for different economic sectors and asset classes. This culminates in strategic selection of the individual stocks, bonds, mutual funds or other investments deemed most appropriate for each individual client’s portfolio.

Market Update: Markets, Uncertainty, and the Week Ahead  

One of the most common questions we hear from investors right now is this: If markets don’t like uncertainty, why do stocks continue to push to new highs when so much feels unsettled? 

The short answer is that markets do care about uncertainty—but uncertainty itself is nothing new. There has never been a point in time when investors had complete clarity about the future. What makes the current environment especially challenging is not just uncertainty, but instability. Headlines, policy signals, and geopolitical developments seem to shift almost daily, creating a sense of constant motion that can feel disorienting. 

Despite that backdrop, equity markets—particularly the S&P 500—have continued to move higher, reaching record levels. Investor sentiment reflects this strength and is currently at its highest level since 2021. That may come as a surprise given the news cycle, but it aligns with a still-solid growth outlook and strong performance from large-cap equities. 

Elevated Sentiment Brings Both Opportunity and Risk 

While strong sentiment can support markets, it also means expectations are high. Unlike periods such as 2017 or 2021, today’s environment still includes meaningful downside risks. Elevated valuations combined with optimistic sentiment can leave markets more vulnerable to negative surprises. 

A Heavy Week for Market-Critical Data 

Several key developments are on investors’ radar. 

Earnings Season: 
More than 100 companies in the S&P 500—representing roughly 20% of the index and about one-third of its total market value—are scheduled to report earnings this week. Major names include Microsoft, Meta, Apple, and Tesla. These results will be closely watched, particularly for insight into how the AI-driven growth narrative is evolving. Expectations are high, and markets will be listening carefully for confirmation that recent momentum can continue. 

Federal Reserve Meeting: 
The Federal Reserve meets Tuesday and Wednesday, and while a rate cut is not expected, investors will pay close attention to Chair Jerome Powell’s press conference. Inflation and labor market data have given the Fed room to pause, but questions around Fed independence and broader policy direction may feature prominently. 

In addition, attention is turning to the future leadership of the Federal Reserve. Historically, nominations for a new Fed Chair emerge when the incumbent has roughly 100 days remaining in their term—and we are now approaching that window as Chair Powell’s term expires in May. 

Government Shutdown Risk: 
January 31 marks another potential government funding deadline. While recent shutdowns have been resolved, betting markets are currently assigning elevated odds to another disruption. While such events often generate headlines, markets tend to focus more on longer-term economic and earnings fundamentals. 

Staying Focused on What Matters 

The flow of news is unlikely to slow, and it can be difficult to separate what truly matters from what simply grabs attention. That’s why maintaining a long-term, disciplined approach is so important. Markets reward patience, perspective, and a focus on fundamentals—not reaction to every headline. 

Our role is to monitor the data that actually drives outcomes: economic growth, corporate earnings, inflation trends, and monetary policy. By distinguishing signal from noise, we can better position portfolios to navigate both uncertainty and opportunity. 

If you have questions about how current market developments relate to your financial plan, we encourage you to reach out to your financial advisor. We’ll continue to watch the data and provide updates as conditions evolve. 

Have More Questions About the Market and Investments? Talk to an EP Wealth Advisor!

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Video Summary: 

Adam Phillips:

Well, if there's any takeaway so far for investors this year, it's that we should expect the unexpected. Just in the last week, we saw news out of Venezuela. We saw the geopolitical risks and concerns spread to Cuba, to Colombia, Iran, and Greenland. These are things that we're going to have to grapple with here in the coming weeks and perhaps months at home. 

We've received a reminder that this is a midterm election year. We've seen a number of announcements in the last few days that are targeted. At this affordability issue or lack thereof, here in the US, to just name a couple of things that caught my attention. Number one, President Trump announced a, here he proposed a ban on institutional purchases of single-family homes in the US. 

So right now, large institutional. Managers are purchasing homes. They account for just about two and a half percent of single-family home purchases here in the us but he's proposing that we stop altogether, that we ban them. And because this is driving up prices, it's driving up the demand for single-family homes and making it that much harder for individual home buyers. 

Staying on that housing theme, we also saw an announcement, and it was an order by President Trump for the government-sponsored entities. Fannie Mae and Freddie Mac to purchase $200 billion of mortgage bonds. Again, really aimed at improving affordability and driving down mortgage rates. We'll see to what extent this actually helps alleviate those costs on potential home buyers. 

But this is, again, just playing on that theme of this is a midterm election year. We know that housing has been a problem. Let's see what we can do. To help home buyers in this market. And then just in the last 24 hours, we received news that the Federal Reserve received a subpoena from the Department of Justice and is being investigated for the remodel of the Federal Reserve Building. 

Now, this is largely seen as politically motivated. Chairman Jay Powell, who has really been quiet and has taken the high road here over the last several months as we've seen signs of pressure from the White House, from the Trump administration on the Federal Reserve. He actually came out with a two-minute video. 

And said, look, this is not about this remodel. This is about our focus on what is actually the right course of monetary policy and not caving into the political demands, within the White House. And so this is a really interesting setup. We have not seen much like this in the past, and so we're seeing. 

Chair, chair, Jerome Powell really pushed back on this. I will just note his term expires in May. He only has three meetings left as fed chair, so you wonder if this is really worth it, but I think it just gets to this. This broader theme of doing what can be done to help drive down interest rates to stimulate the economy and support the housing market. 

So, this is really, really exciting, and as I said, look, we should expect the unexpected. For now, we're going to focus on the data, and I think that's so important that we don't know what headline is going to come out next. As investors, let's focus on what actually drives long-term stock performance. And that is earnings. 

And so coincidentally, we have a kickoff of earnings season. This week it starts as usual with the financial companies. By the end of this week, about a third of financial companies in the S&P 500 will have reported earnings. This is really important. I always say earnings season is important, you know, every quarter it's on the radar of investors. 

This one certainly is as well. And that's because we want to hear from management how they are approaching. Concerns around tariffs, around artificial intelligence, and other geopolitical concerns. What are their hiring plans? What are they seeing when it comes to consumption and demand from households? 

So it's really, really important. But we also know that after a few really strong years of returns in the S&P 500 and equity markets in general, valuations are quite elevated. And so we need. Earnings to continue to grow to justify these valuations and drive stocks higher from here. So for the year, or excuse me, for the quarter, on a year-over-year basis, we're looking at the S&P 500 delivering earnings growth of about seven or 8%. 

And that would be quite good. I would not, I would not be surprised to see the actual results come in quite a bit higher, just because we've seen that over the last. Several quarters. We've seen that these companies continue to beat expectations. And I think that's been one of the, one of the things that's been helping to drive stocks higher in recent months is that. 

That, that, we always, we're always on guard around earning season. And these companies just end up just leaping that hurdle, that earnings hurdle, and really delivering, on, on what we think are actually, pretty, good expectations. They end up surpassing them quite handily. So we'll look for more of the same this time around. 

Obviously, if actual results come in short of expectations, that'll, um, that'll mean something else for stocks. But we'll keep our fingers crossed as we enter earnings season here. I'll leave it there for right now. I'll look forward to talking to you next time. If you have any questions, please feel free to reach out to your financial advisor.