Earnings January 9, 2026

Market Overview

Earnings season is being shaped today by sector‑specific charges and retail sales momentum, overlaid with macro and policy signals that will modulate near‑term EPS trajectories. The largest single headline on earnings is General Motors' announcement of substantial fourth‑quarter charges tied to its EV pullback and China restructuring, which will meaningfully distort GAAP results and investor comparisons in the near term [2]. At the same time, consumer discretionary names with strong holiday demand — exemplified by Costco — are reporting positive sales momentum that could buoy consensus upside for Q4 and early 2026 guidance [16]. Broader macro datapoints and policy proposals (jobs, mortgage bond purchases, defense budget plans) create cross‑currents that will affect revenue growth, margins, and the cadence of cost‑takeout measures across industries [7][4][6].

Key Developments

1) GM $7.1B Q4 charges: GM said it will record roughly $7.1 billion in fourth‑quarter charges related to downgrading EV investments and reorganizing operations in China, a move intended to reset capacity and cash spend amid weaker EV demand [2]. These charges are one‑time in nature but will materially reduce reported Q4 EPS and complicate year‑over‑year comparisons. Management commentary tied to these charges will be critical for forward guidance and the adjusted (non‑GAAP) earnings metrics investors follow [2].

2) Retail strength at Costco: Costco's stronger December sales provide evidence that membership retail and bulk grocers can still generate resilient holiday revenue and margin support, which should flow through to stronger comparable‑store sales and upside to EPS for retailers that disclose December trading updates [16]. Costco's performance will be a read‑through for consumer staples and parts of discretionary retail during earnings calls.

3) Macro and policy headwinds/tailwinds: The expected December jobs report and consensus payrolls will influence wage cost trajectories and consumer demand assumptions embedded in guidance [7]. Policy moves — from a high‑profile proposal to buy $200B in mortgage bonds to lower mortgage rates to rhetoric targeting institutional homebuyers — could alter housing activity and mortgage servicing/REIT income streams, affecting banks, homebuilders, and mortgage‑related equities' near‑term earnings outlooks [4][11]. A proposed large defense budget has lifted defense equities pre‑market, signaling potential revenue tailwinds and better near‑term earnings visibility for prime contractors if enacted [6]. Inflation dynamics, particularly China's CPI movements, remain relevant for multinational margins and pricing power assumptions in upcoming reports [15].

Financial Impact

GM's charges will depress GAAP EPS materially for Q4; however, investors will focus on adjusted earnings, cash flow outlook, and the pace of restructuring savings [2]. Expect GAAP EPS to swing negative or show large year‑over‑year declines, while adjusted EPS will be presented as management's preferred metric — monitor reconciliations and the permanence of cost reductions. Costco's December strength should support its FY guidance and membership renewal trends, improving gross margin leverage into the next quarter and likely producing upside to both revenue and operating‑margin consensus in the near term [16].

Macro forces could compress or expand margins: stronger payrolls and wage pressure can raise SG&A and COGS assumptions across retailers and service firms [7], while lower mortgage rates (if policy nudges markets) can lift housing starts and bank mortgage income but compress yields for mortgage REITs [4][11]. Defense budget expansion is a clearer earnings positive for contractors with multi‑year contract pipelines [6]. Finally, retailers and consumer goods companies will cite China inflation and input‑cost trends when discussing margin bridges for the quarter [15].

Market Outlook

Near term, expect headline volatility as companies with one‑time charges (e.g., GM) report materially lower GAAP EPS and present adjusted metrics for investor evaluation; stock reactions will hinge on credibility of cost‑takeout plans and forward guidance [2]. Consumer‑facing earnings should see pockets of upside where December sales held or accelerated (Costco is the exemplar) and where membership/loyalty economics remain intact [16]. Monitor the December jobs print and any policy moves on mortgage bonds or defense appropriations — these will shift forward estimates for banks, homebuilders, mortgage REITs, and prime defense contractors, and will therefore be a central focus in upcoming calls [7][4][6][11]. Finally, watch for commentary on China cost pressures as companies reconcile input costs with pricing power into next quarter guidance [15]. Overall, earnings dispersion will widen this cycle: one‑time restructuring charges will weigh headline EPS even as operational earners and select retailers deliver resilient underlying profits.