US equity investors will focus on growing tensions between the Trump administration and its European allies over Greenland, the Federal Reserve's preferred inflation data, and earnings this week.
* President Donald Trump said that Denmark, Norway, Sweden, Finland, France, Germany, the UK, and the Netherlands would face a 10% tariff starting on Feb. 1, which would rise to 25% on June 1, "until such time as a Deal is reached for the Complete and Total purchase of Greenland."
* "It remains highly uncertain, in our view, whether these tariffs will be implemented," Goldman Sachs said in a note Monday, when the US market was closed to observe Martin Luther King, Jr. Day.
* "We expect the US dollar to stay firm as the Fed might prioritise inflationary impacts, which limits further Fed easing pressure," Javier Corominas, director of global macro strategy at Oxford Economics, said in a note Monday. "And the geographically targeted nature of the tariff threat reduces the likelihood of a repeat of April's 'sell America' trade."
* "The impact of rising transatlantic tensions on [European Union] member states as a whole is more uncertain and potentially more far-reaching, particularly with regard to external trade and European defence spending needs," Yesenn El-Radhi, vice president of the sovereign group at Morningstar DBRS, said in a note Tuesday.
* Quarterly earnings announcements due this week include Netflix (NFLX), US Bancorp (USB), United Airlines (UAL), Intel (INTC), 3M Company (MMM), and Charles Schwab (SCHW). Investors will closely monitor earnings as mega-cap banks reported mixed results last week.
* US macroeconomic data due this week includes personal, consumption, and expenditures, or PCE, data, the Q3 gross domestic product growth final reading, and S&P Global manufacturing and services PMIs. Investors will be watching the data ahead of the Jan. 28 monetary policy meeting, seeking policy guidance for the months ahead.
