Azerbaijan is deepening its strategic cooperation with the Organisation for Economic Co-operation and Development (OECD) as part of a broader effort to modernise its economy and align with international standards. The expanded partnership is aimed at supporting structural reforms designed to improve transparency, attract foreign investment, and strengthen the country’s integration into global markets.

Under the enhanced cooperation framework, Azerbaijan will focus on capital market development, trade facilitation, and improved connectivity. These areas are seen as critical to reducing bureaucratic barriers, simplifying logistics for international trade, and strengthening corporate governance practices in line with global norms.

In practical terms, the reforms are expected to create more efficient trading routes, deepen domestic capital markets, and improve regulatory oversight. Officials say the changes will help boost investor confidence and position Azerbaijan as a more competitive and predictable destination for foreign capital.

The OECD’s role is expected to provide technical expertise and policy guidance, helping Azerbaijan benchmark its reforms against best international practices. Analysts note that closer cooperation with the OECD signals a push toward greater economic transparency and rule-based governance, key criteria for long-term investment and sustainable growth.

Mr. Martin Vladimirov, director of the geoeconomics and energy security programmes at the Centre for the Study of Democracy (CSD), a European public policy institute, described the move as strategically significant. “The expansion of strategic cooperation between the OECD and Azerbaijan is an important step forward in Baku’s transatlantic alignment,” he said. “Azerbaijan plays a critical role in Europe’s energy security, and closer cooperation on economic governance strengthens its image as a crucial Western partner in the region,” he added.

Energy security and geopolitical context

Vladimirov also said stronger economic governance supported by the OECD could help ensure that Azerbaijan does not become a gateway for Russia or China to expand their economic footprint in strategically sensitive sectors.

“A push for better and more transparent economic governance with the help of the OECD will reinforce Azerbaijan’s position as a reliable partner for both the EU and the US,” he said.

The cooperation comes at a time when Azerbaijan’s importance to Europe has increased, particularly in the context of energy diversification and regional connectivity. Analysts say economic reforms that improve transparency and regulatory standards could further strengthen trust between Azerbaijan and its Western partners.

Observers note that successful implementation could enhance the country’s competitiveness and strengthen its integration with global value chains.

The expanded OECD partnership is part of a wider reform agenda that Baku says is essential to sustaining growth, modernising the economy, and reinforcing Azerbaijan’s role in regional and international economic systems.

Oil hit a fresh four-month high after President Trump threatened another attack on Iran, urging Tehran to negotiate a deal.

“Hopefully Iran will quickly ‘Come to the Table’ and negotiate a fair and equitable deal,” Trump said in a post on his Truth Social network, adding that “the next attack will be far worse!” than the one that took place last year.

The potential risk to Iranian supplies has injected a premium into oil prices and led futures to start the year on a strong footing, up more than 10% this month, despite forecasts for a glut. That has also kept the cost of bullish options high relative to bearish ones.

Brent futures reached $68.19 a barrel after Trump’s post, the highest level since the end of September, extending a 3% jump in the previous session.

Trump had already reiterated on Tuesday that a “big armada” was headed to the Middle East, adding that hopefully the US wouldn’t have to use it. On Wednesday, he said the fleet is larger than the one sent to Venezuela, where Nicolas Maduro was deposed earlier this year.

Chevron Corporation has named Thomas W. Horton as a new independent member of its board of directors, appointing him to the board’s audit committee in a move that underscores the U.S. oil major’s focus on governance and capital discipline as it navigates a shifting energy landscape.

Horton, 64, is currently a partner at Global Infrastructure Partners, a major global infrastructure investment firm, and previously served as a senior advisor at private equity group Warburg Pincus. He brings extensive experience from both large-scale capital investment and corporate leadership, most notably from the aviation sector.

Before moving into infrastructure and private equity, Horton served as chairman and chief executive officer of American Airlines and its parent AMR Corporation. During his tenure, he oversaw a significant expansion of the airline’s network, including its merger with US Airways, which reshaped the U.S. airline industry and created the world’s largest carrier at the time.

Chevron Chairman and CEO Mike Wirth said Horton’s background in leadership, governance, and capital-intensive industries would add valuable perspective to the board as the company continues to focus on long-term value creation.

Beyond his executive roles, Horton has deep board-level experience. He currently sits on the boards of Walmart and General Electric, now operating as GE Aerospace, and has previously served as a director at Qualcomm and EnLink Midstream. That mix of industrial, consumer, technology, and midstream exposure aligns with Chevron’s increasingly complex operating environment.

The appointment comes as Chevron seeks to balance growth in its core oil and gas business with shareholder returns and selective investments in lower-carbon technologies. Like its U.S. peers, Chevron has emphasized capital discipline, cost control, and returns over aggressive expansion, even as it continues to invest in long-cycle projects and emerging energy segments.

Board refreshment has become a broader trend across the energy sector, with companies adding directors who bring experience in infrastructure, finance, and large-scale project execution. For integrated oil companies, governance and audit expertise are increasingly critical as investors scrutinize capital allocation, emissions targets, and risk management more closely.

Chevron remains one of the world’s largest integrated energy companies, with operations spanning upstream oil and gas production, refining, petrochemicals, and fuels manufacturing. The company has also outlined ambitions to lower the carbon intensity of its operations while selectively growing new energy businesses, including hydrogen, carbon capture, and renewable fuels.

Horton’s addition to the audit committee suggests Chevron is placing particular emphasis on financial oversight and risk governance as it advances those strategies in a volatile commodity and policy environment.

Asian shares were mixed on Wednesday after the S&P 500 ticked to a record, as the U.S. dollar’s value slid further.

Later Wednesday, the Federal Reserve will announce its next move on interest rates. The expectation is that it will hold its main interest rate steady for now.

South Korea’s benchmark hit a record, lifted by gains for technology shares like computer chip maker SK Hynix, which climbed 3%. The Kospi was up 1.3% at 5,152.14.

Tokyo’s Nikkei 225 index lost 0.5% to 53,055.58. The dollar rebounded slightly against the Japanese yen but has still weakened sharply since last week, putting pressure on shares of major exporters.

Toyota Motor Corp. lost 3% and other major manufacturers also extended losses.

The dollar was trading at 152.75 yen, up from 152.19 yen. But it’s nearly 4% lower than its level last week, when it surged to near 160 yen, prompting both Japanese and U.S. officials to warn they will intervene to stanch the yen’s decline.

The euro slipped to $1.1995 from $1.2041 late Monday. It also has surged against the dollar.

An index measuring the U.S. dollar’s strength against several of its competitors has dropped to its lowest point since 2022.

The price of gold jumped nearly 3% to surpass $5,200, and silver’s price jumped 9%.

Prices of precious metals have been soaring as investors have sold dollars to park their money in assets considered to be relatively safe in times of turmoil.

Elsewhere in Asia, Hong Kong’s Hang Seng index rose 2.4% to 27,782.59, while the Shanghai Composite index added 0.5% to 4,160.01.

Taiwan’s Taiex advanced 1.1%, while the Sensex in India gained 0.5%.

On Tuesday, U.S. stocks zigzagged following mixed profit reports from UnitedHealth, General Motors and other big companies.

Several of Wall Street’s most influential stocks will deliver their latest earnings reports later this week. They include Meta Platforms, Microsoft and Tesla on Wednesday and Apple on Thursday.

The S&P 500 rose 0.4% to 6,978.60, edging past its prior all-time high set a couple weeks ago. The Dow Jones Industrial Average dropped 0.8% to 49,003.41, and the Nasdaq composite climbed 0.9% to 23,817.10.

The dollar has weakened since President Donald Trump threatened tariffs against several European countries that he said opposed his taking control of Greenland. Such threats, along with worries about risks like the U.S. government’s heavy debt, have periodically pushed global investors to step back from U.S. markets, a move that’s come to be called “Sell America.”

On Wall Street, Corning helped lead the market higher and climbed 15.6% after announcing a deal with Meta Platforms worth up to $6 billion. Corning will supply optical fiber and cable to help build out data centers for Meta, enough that Corning is expanding its optical-fiber manufacturing facility in Hickory, North Carolina.

Also supporting the U.S. stock market were gains for General Motors, which rose 8.7%, and hospital-operator HCA Healthcare, which rallied 7.1%. Both delivered profits for the end of 2025 that topped Wall Street’s expectations. Each also approved programs to send billions of dollars to their investors by buying back their own stock.

A report from the Conference Board said confidence weakened among U.S. consumers last month. Economists had expected to see a slight improvement, but confidence dropped to its lowest level since 2014, even lower than it was during the COVID-19 pandemic.

Inflation remains stubbornly above the Fed’s 2% target, and lower interest rates could worsen increases in prices for U.S. consumers at the same time that they give the economy a boost. Traders expect the Fed to resume its cuts to interest rates later this year.

The pressure is on companies to deliver strong growth in profits following record-setting runs for their stock prices. Stock prices tend to follow the path of corporate profits over the long term, and earnings need to rise to quiet criticism that stock prices have grown too expensive.

In other dealings early Wednesday, U.S. benchmark crude oil rose 42 cents to $62.81 per barrel. Brent crude, the international standard, was up 34 cents at $66.93 per barrel.

The world’s oil production is running flat out, with consumption far outstripping new discoveries. According to Norwegian energy consultancy Rystad Energy, annual conventional discovered volumes averaged more than 20 billion barrels of oil equivalent (boe) per year in the early 2010s; however, they have averaged to slightly over 8 billion boe per year since 2020.

Indeed, global oil discoveries have fallen sharply over the past decade. According to Rystad Energy, annual conventional discovered volumes averaged more than 20 billion barrels of oil equivalent per year in the early 2010s, but have declined to just over 8 billion boe annually since 2020, despite standout frontier finds in Guyana, Suriname, and Namibia. Rystad further notes that the average drops to roughly 5.5 billion boe when looking at discoveries between 2023 and late 2024, highlighting how subdued exploration success has become even as global oil consumption remains near record levels.

In a separate analysis, Rystad has shown that recent conventional discoveries have replaced well under one-third of annual oil production on a sustained basis, underscoring a widening gap that increasingly must be filled through unconventional resources, enhanced recovery from mature fields, or higher long-term investment levels.

Capital expenditure on exploration was severely slashed after the mid-2010s, dropping to around $50 billion to $60 billion in 2025, significantly down from the $115 billion peak in 2013. This is a mere fraction of the $500–540 billion annual budget required to prevent supply shortages and meet future demand.

According to Rystad, the decline can also be chalked up to a strategic change wherein the global exploration map of E&P companies is no longer defined by sheer acreage, with companies employing strategic precision. National oil companies (NOC) and supermajors alike are increasingly focusing on high-impact basins, including Suriname’s deepwater basin, Namibia’s Orange Basin, and Brazil’s pre-salt basin, as well as infrastructurally rich near-field explorations, while divesting from mature and low-return regions. These modern exploration campaigns focus on nearby, lower-cost tiebacks, better subsurface data, existing infrastructure, and digital tools to manage risk and improve returns.

This concentration of discoveries in a handful of countries or specific hotspots–Namibia, Guyana, Brazil and Suriname, among others–highlights the narrowing geography of exploration success and the risk-taking appetite of global E&P companies. Frontier nations see this as an opportunity to lure and attract foreign investment via friendly fiscal terms to help generate revenues and build energy security, while continued appraisal of under-explored plays, such as ultra-deepwater or the untapped stratigraphic traps, offers mature-producing nations optionality for long-term growth and a way of arresting declines in production.

The 2006 discovery of the Tupi field (now Lula) by Petrobras and its partners in the Santos Basin, Brazil, revolutionized the oil industry by unlocking massive pre-salt reserves. Located under nearly 2,000 meters of water and an additional 2,000 meters of salt, this “elephant” find required advanced seismic technology to image beneath the salt, proving that previously deemed “impenetrable” geological layers could be accessed. The field holds estimated recoverable resources of 5-8 billion barrels of oil equivalent. The reserves are located ~7,000 meters below the ocean surface, requiring innovative, specialized drilling techniques to navigate the salt layer. The discovery was a “calculated gamble” that relied heavily on PROCAP (Petrobras Technological Capacitation Program in Deep Waters) for developing techniques for extreme depths. Extensive 3D seismic programs were used to image the subsurface through more than 2,000 meters of salt, providing the detailed geological insights necessary to map the pre-salt structure. 3D geocellular modeling & visualization was used to analyze the structure and define the potential reservoir, helping to identify the “outer high” feature in the Santos Basin where Tupi was located. Nuclear magnetic resonance (NMR) Logging was employed to accurately measure porosity and differentiate between oil and water, particularly in complex carbonate rocks.

The second frontier emerged in Guyana and Suriname, where ExxonMobil (NYSE:XOM) made the Liza-1 discovery in 2015, which encountered more than 295 feet (90 meters) of high-quality, oil-bearing sandstone reservoirs in 5,719 feet (1,743 meters) of water. Prior to this, the region was considered a frontier with a history of over 40 dry holes in the basin, making the 2015 find a dramatic, game-changing “wildcat” success. Exxon employed advanced, proprietary, and high-resolution imaging technologies designed to map complex subsurface geological structures deep below the seafloor. Full Wavefield Inversion (FWI), a high-resolution seismic imaging technique used to analyze seismic data, helped geoscientists to “see” and differentiate rock properties with high precision to identify reservoirs. High-performance computing was used to process large, complex datasets, allowing for faster and more accurate decision-making in the exploration phase.

The third and most recent frontier has been unfolding in Namibia’s Orange Basin, where Shell (NYSE:SHEL), TotalEnergies (NYSE:TTE) and Galp Energia (OTCPK:GLPEF) have opened one of the most promising new petroleum provinces in recent years. 3D seismic acquisition and processing were critical for imaging deep subsurface structures and identifying potential traps. Major, high-capacity, semi-submersible rigs and drillships–such as the Deepsea Bollsta, Deepsea Mira, and Noble Venturer–were employed to drill into the deepwater, high-pressure, and high-temperature environments. Advanced geochemical techniques, such as gas chromatography-mass spectrometry (GC-MS) and quantitative diamondoid analysis (QDA), were used to analyze the source rock and oil composition. Meanwhile, intense wireline logging, including sidewall coring and drill stem testing, was crucial to confirm the reservoir’s porosity, permeability, and fluid properties (e.g., 37° API oil).

Oil tanker rates are soaring this year, picking up where they left off 2025—multi-year highs amid growing supply, longer routes, and disruptions due to sanctions and altered shipping lanes.

At the end of 2025, the global supertanker market tightened as crude supply from the OPEC+ group and the Americas rose, and vessels were making increasingly longer trips. So much the market tightened that several new-built very large crude carriers (VLCC) made empty maiden voyages from yards in Asia to pick up supply from producing countries in the Middle East, the Americas, and Africa, instead of loading fuels made in Asia on their first journey.

Usually, supertankers travel with gasoline cargoes on these first trips, but apparently the market shortage prompted owners to forego this loading and rush to send the tankers on load crude as daily rates soared.

Strong 2025 Tanker Rates

The daily rates for chartering a vessel to transport commodities surged in 2025, with oil tanker rates skyrocketing by 467%, as shippers of growing commodity supply were grappling with a series of route disruptions and sanctions.

Rates reached multi-year highs last year and continued to rally this year, too.

Shipbrokers and analysts expect oil freight rates to remain elevated this year as new geopolitical developments are upending crude flows and tanker markets.

Despite the typically weaker commodity demand period toward the end of each year, the last weeks of 2025 didn’t show any weakness in the vessel rates for transporting crude oil.

Supertanker rates on the route between the Middle East and China hit their highest in five years as traders sought alternatives to Russian crude after the U.S. sanctioned Russia’s biggest oil producers and exporters, Rosneft and Lukoil. Rates for smaller tankers also shot up as traders turned to all available vessels to transport crude.

Stronger 2026 So Far

This year, rates have increased further, as the sanctions on Russia and Venezuela have raised volumes of oil in floating storage held in tankers.

In addition, the new oil order in Venezuela imposed by the Trump Administration prompted the world’s top traders to charter more legit vessels to ship and sell Venezuela’s crude to U.S. refineries on the Gulf Coast or in Europe and Asia.

In the second half of 2025, the Baltic Dirty Tanker Index – a measure of freight rates on several key global routes for crude – jumped by about 30%. Less than a month into 2026, the index has surged by another 30%, according to data compiled by Bloomberg.

As two of the world’s top commodity traders, Vitol and Trafigura, are back trading Venezuela’s oil, with the authorization by the U.S. Administration, more tankers will be needed to transport crude out of the world’s biggest oil reserves holder.

A week after the ousting of Nicolas Maduro, the Venezuela trade turned from illicit under-the-radar shipments to China on shadow fleet tankers to flows to U.S. refineries on the Gulf Coast on legit vessels chartered by traders authorized by the Trump Administration.

Vitol and Trafigura have also started offering Venezuelan crude to refiners in China and India for March delivery, which will tie up more tankers on longer-haul routes.

“Potential redirection of Venezuelan crude oil exports could boost already high tanker rates in the near to medium term due to a shift to the mainstream fleet from shadow tankers,” Fitch Ratings said in a note last week.

“Volatility linked to geopolitical flashpoints, including in Venezuela and Iran, will likely lead to oil buyers diversifying their sources, further supporting tonne-miles and the earnings of tanker owners and operators,” the credit rating agency added.

The supertanker markets, the ones for very large crude carriers (VLCC) capable of shipping up to 2 million barrels of crude, remained firm last week despite a slight weakness from the previous week, the Baltic Exchange said in a weekly report on Friday.

The daily rates for a supertanker remained above $100,000, at $112,394 for the standard Baltic VLCC, according to the Baltic Exchange.

A return to Suez Canal trips has the potential to slash high tanker rates, but any resumption of oil shipments on the shortest route from Europe to Asia remains a distant prospect.

Container shipping giant Maersk tentatively returned, sending vessels on the trans-Suez route connecting the Middle East and India with the U.S. East Coast.

The company earlier this month said it would continue to monitor the security situation in the Middle East region very closely, and that “any alteration to the MECL service will remain dependent on the ongoing stability in the Red Sea area and the absence of any escalation in conflicts in the region.”

Oil tanker shippers haven’t started using the Suez Canal route yet amid persistent security concerns, the unrest in Iran, and the latest U.S.-Iran rhetoric.

“Most containership operators that ceased transits are being cautious and shifting back only gradually,” Fitch said, referring to the Suez route.

“For tanker shipping, normalisation of these transits could more than offset any benefit from the redirection of Venezuelan oil,” the credit rating agency noted.

Wall Street is giving off mixed signals about Tesla Inc. Analysts are increasingly skeptical of the electric-vehicle maker’s earnings potential this year, but their expectations for the company’s stock price keep climbing.

“Tesla is truly unique in capital markets,” said Nicholas Colas, co-founder at DataTrek Research. “It is much more like a VC-funded startup than public equity. As long as the vision is bold enough, the valuation levers off that rather than earnings and cash flows.”

Over the past 12 months, the average forecast for Tesla’s 2026 net income has tumbled 56% from $14.1 billion to $6.1 billion. Yet, during the same period, analysts have raised their average 12-month price target for Tesla shares to $409.49 from $337.99. The stock is up 7% in that time after closing Tuesday at $435.20, well above Wall Street’s expectations for a year from now.

The dynamic is “very unusual,” Colas said, since higher price targets typically go hand-in-hand with improving earnings estimates, not dimming expectations. The company reports its fourth-quarter and full-year results on Wednesday. A Tesla representative did not respond to a request for comment.

Tesla’s stock, which raced to an all-time high in December before retreating some, trades at more than 195 times its expected earnings over the next 12 months. That’s by far the most-expensive valuation among the Magnificent Seven tech giants, which combined trade for around 29 times anticipated earnings. By comparison, its next closest peers in the group are Apple Inc., Alphabet Inc., Microsoft Corp. and Amazon.com Inc., all of which are priced between 25 and 30 times forward earnings.

The shares also have the second-highest multiple in the entire S&P 500 Index, trailing only takeover target Warner Bros. Discovery Inc. and well ahead of number three Palantir Technologies Inc.

“If the stock was trading closer to peers, we might be inclined to suggest the risk/reward is appealing,” HSBC analyst Mike Tyndall wrote in a note to clients earlier this month. However, the other Mag Seven members have “higher margins, generate more cash,” and yet are priced at a significant discount to Tesla, he added.

To get a sense of how much of an outlier the company has become, consider that every member of the Magnificent Seven has seen their price target rise over the past year — but only Tesla’s profit estimates have deteriorated simultaneously.

The amount of hope baked into Tesla’s share price has become a point of controversy among investors. Clearly the stock isn’t moving on the outlook for EV sales. Rather, it’s primarily about Chief Executive Officer Elon Musk’s vision for humanoid robots and driverless cars. While those are certainly promising areas for future growth, they’re also businesses where Tesla has yet to demonstrate real profitability.

Tesla’s long-term potential will be in focus when Musk speaks to Wall Street on Wednesday afternoon following the company’s earnings report. The disparity between its value and performance means the CEO’s guidance is more important than ever. As the company’s fundamentals weaken and car sales drop, analysts want to see how much progress it’s making in the push to create a thriving business around autonomous vehicles and robots.

“Deliveries barely matter anymore,” Piper Sandler analyst Alexander Potter wrote in a note to clients earlier this month after Tesla’s fourth-quarter vehicle sales disappointed. “Instead, TSLA’s performance in 2026 should be driven by progress in AI and robotics.”

Potter has an overweight rating on Tesla shares and a target price of $500, which implies a gain of about 14% over the next 12 months. But “without new disclosure, we fear investors may refocus on declining near-term estimates,” Potter wrote.

This tension is at the core of the debate over the stock’s inflated valuation. The “generational growth opportunities” in robotics, autonomy and energy storage make Tesla’s price worth paying, according to Canaccord Genuity analyst George Gianarikas.

In fact, Tesla’s radical shift in strategy also makes it the rare case where anticipated earnings often do deviate sharply from the stock’s price targets, said Jonestrading chief market strategist Michael O’Rourke.

“Analysts are willing to value the company on the businesses that are not commercial yet,” he said. “In short, they would rather bet on Elon Musk than bet against him.”

(Bloomberg) — Dollar traders are paying the most on record to bet on a deeper selloff in the greenback as a volatile US political landscape triggers a rush into bearish hedges.

The premium for short-dated options that profit from a weaker US currency has widened to the highest level since Bloomberg began compiling the data in 2011. The bearish sentiment isn’t confined to the front-end — investors are the most pessimistic on the dollar’s long-term outlook since at least May 2025.

While the Bloomberg Dollar Spot Index fluctuated on Tuesday, its drop in the previous three days is the steepest since the US tariff turbulence in April last year. Should the losses resume, as options prices suggest, the currency could hit its weakest level in four years.

“Unpredictable US politics is unambiguously dollar-negative,” said Jesper Fjarstedt, a senior analyst at Danske Bank A/S. “The developments over the past week have pushed markets to embed a renewed political risk premium.”

Gold Rally Has Room to Run on Exodus From Dollars, Amundi Says

The greenback is languishing at the bottom of the G-10 currency pile this year, pointing to a shift in the way investors view the traditional haven asset. It’s facing pressure from concern about rising US deficits and trade frictions, as well as an accelerating diversification into gold and other reserve assets.

There are heavy flows behind the move, not just sentiment.

On Monday, trading volumes through the Depository Trust & Clearing Corporation hit the second highest on record, surpassed only by the selloff on April 3, 2025. On a four-day rolling average, market participation has reached an all-time high.

And the positioning is heavily one-sided. Since Thursday, roughly two-thirds of options trades in the euro and the Australian dollar have been bets on further greenback weakness.

Market anxiety is making itself felt in hedging costs: one-week dollar volatility has spiked to its highest since early September.

Meanwhile, butterflies — which measure the demand for protection against outsized price swings — have climbed to a seven-month high, signaling that traders are bracing for the dollar to extend its break out of its recent ranges.

Yen Impact

On top of the other concerns, the dollar’s drop has been exacerbated by speculation the US administration might be willing to team up with Japanese monetary authorities in order to put a floor under the slumping yen.

The Bloomberg Dollar Spot index was little changed in early New York trading on Tuesday, hovering 0.3% above its 2025 low.

“US policy volatility is now debasing the dollar,” said Luis Costa, head of emerging markets strategy at Citi. “This, coupled with potential government shutdowns, is prompting a market reshuffle into dollar shorts.”

The Federal Reserve is widely expected to hold interest rates steady at its policy meeting this week, following three successive cuts at the end of 2025. So all eyes will be on how long officials signal they plan to hold rates steady.

“My expectation is they’re signaling a pause,” Esther George, former president of the Kansas City Federal Reserve, said in an interview. “I have a feeling they’re going to hold for a while.”

In recent weeks, several prominent members of the Fed, including New York Fed president John Williams and Fed Governor Michael Barr, have used the phrase “policy is in a good place.”

“That’s the signal to say this gives us flexibility to move either direction,” George said. “We’re not going to say we’re on a preset course; we’re just going to go meeting by meeting.”

The central bank cut rates three times last fall to a range of 3.5% to 3.75% — within estimates of a neutral stance designed to neither spur nor slow economic growth.

Wilmer Stith, senior bond portfolio manager for Wilmington Trust, said he doesn’t think the Fed will box itself in to taking a pause on lowering rates, anticipating that Fed Chair Jerome Powell will show flexibility.

“I don’t think there will be a whole lot of activity other than holding rates. The Fed is at a point where they can be patient, and we don’t need to do anything. Short, sweet,” Stith said.

“I think it’ll be see what data says, decide, and wait for more data and decide, gently gliding down their landing.”

After last fall’s expansionary policy moves, Fed officials are watching the job market and inflation, and would be expected to move when the data suggests the risks have shifted.

As recently as last June, many stock analysts predicted the stock market would end 2025 without any real gains.

At the time, several prominent forecasters projected the S&P 500 index would close out the year in a range between 5,600 and 6,100. The S&P had started the year around 5,900.

When a turbulent 2025 finally ended, the S&P closed at 6,845.5, up more than 16%.

That was great news for stock owners. But it also raised some questions in hindsight: How could so many forecasters have been that far off on where the market was headed? What changed between June and December?

To answer them, let’s go back to the start of 2025.

Stock forecasters predicted an average year in 2025

The S&P had finished 2024 at 5,881.6, wrapping a spectacular year that saw the index rise by 23%.

In a typical year, stock forecasters “tend to cluster around 5% to 10% gains in their year-end forecasts,” said Jeffrey Buchbinder, chief equity strategist at LPL Financial.

Stocks gain about 10% in an average year. So, all else equal, a year-end forecast in the 5%-10% range isn’t likely to be far off.

LPL Financial forecast the S&P would end 2025 somewhere between 6,275 and 6,375, gaining roughly 7%-8%, according to a Jan. 1 roundup of stock market forecasts by Bloomberg. Bank of America predicted, rather ominously, that the S&P would end the year at 6,666. JPMorgan Chase put the figure at 6,500.

‘Liberation Day’ upended those predictions

But many of those forecasts shifted dramatically after President Donald Trump’s so-called “Liberation Day.” On April 2, Trump announced a universal 10% tariff on all imports, with additional import taxes on many countries, which the president displayed on an oversized board.

By April 8, the S&P had plummeted below 5,000, down almost 20% from its then-record high of two months earlier.

“Investors sold first and asked questions later,” said David Meier, a senior investment analyst at The Motley Fool.

Traders feared Trump’s tariffs would seed runaway inflation, and that consumers would stop spending. They also feared the unknown: U.S. tariffs hadn’t ranged so high in more than half a century.

“The tariff rates that he had on the board were essentially ridiculous,” Meier said. “Meaning, they were so high but did not have any real justification under them. So, the market reacted, in my opinion, perfectly rationally.”

After stocks plummeted, Trump paused on tariffs

A week after Liberation Day, Trump paused most of his “reciprocal” tariffs, dialing them back to 10%. The stock market soared.

“The worst-case scenario following Liberation Day did not come to pass,” said Eric Teal, chief investment officer at Comerica Wealth Management.

But uncertainty remained, and the S&P would not reach a new record high until late June.

It was during those spring months that stock market forecasters dialed back their projections and recast 2025 as a year of meager gains.

Analysts still widely believed Trump’s tariffs would trigger inflation and hamper spending. They feared a recession.

“I think analysts had a hard time pricing that uncertainty and ended up being too conservative,” Buchbinder said.

The worst-case tariff scenario never came

The worst fears did not bear out. America’s annual inflation rate never climbed past 3%.

Dire predictions about tariffs and inflation assumed American consumers would bear the brunt of those taxes.

That didn’t happen. Only about 20% of Trump’s tariffs “passed through” to consumers, according to a study by the National Bureau of Economic Research. As imported products traveled from their country of origin to American retailers to consumers, the tariff impact softened at every stop.

“That inflation never really showed up,” Buchbinder said. “Companies did a really good job managing it. Our trade partners ate some of it.”

And what about the ‘AI bubble’?

Another factor that dampened stock predictions for 2025 was the prospect of an AI bubble.

Throughout that year and into this one, Wall Street observers have debated whether the stock market has entered “bubble” territory: In this case, a runup in the prices of tech stocks, fueled by outsized expectations about artificial intelligence.

Perhaps the best evidence of a bubble lies in ratios of stock prices to company earnings, which sit at a historic high.

Price-to-earnings ratios tell you if a stock is overvalued. A common yardstick, the cyclically adjusted price-to-earnings ratio, or CAPE ratio, stands at 40.42 for the S&P 500, as of Jan. 21.

That metric ranged higher only once before, at the peak of the dot-com bubble in 1999-2000.

Investor surveys suggest that stock owners know all about the AI bubble. They continue to buy AI stocks anyway.

In a recent survey by The Motley Fool, 93% of investors with AI stocks said they plan to hold or expand those investments over the next year. Only 7% plan to decrease their AI holdings.

AI investment “just blew past everybody’s expectations” in 2025, and corporate earnings came in higher than expected, Buchbinder said. Those trends drove stock prices higher.

Where will stocks head in 2026?

What, then, do forecasters expect from the stock market in 2026?

LPL predicts the S&P 500 will end the year at 7,400, an 8% gain. Comerica Wealth sets the same target. Wells Fargo Investment Institute has a year-end target of 7,500, a nearly 10% gain.

The biggest drag on those projections might be the looming midterm elections: Midterms tend to work out poorly for the party in power, seeding potential volatility.

“We’ve really emphasized playing defense this year,” Teal said.

On the plus side, investors may feel growing confidence in the economic pragmatism of the president.

One lesson of Liberation Day, to many economic observers, was Trump’s sensitivity to stocks. His April 2 tariffs lasted one week. At other pivotal moments in his second administration, Trump has backed off from policy decisions that sent the stock market reeling.

For stock traders, that’s a welcome trend.

“The president, given enough time, really does care about the markets,” said Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute. “That seems to be his report card for himself.”