Stocks opened this week on the defensive after fresh signs of trade friction between Washington and Beijing punctured a rally that had kept major indexes within roughly 1% of record levels. The pullback was modest, but its timing — immediately ahead of one of the busiest corporate reporting weeks of the season — heightened market sensitivity to upcoming earnings from megacap banks, manufacturers and asset managers.

The bond market’s closure Monday for Columbus Day removed a layer of intraday liquidity as traders digested headlines about tariffs and trade negotiations. “When you take bonds out of the market on an already news-heavy day, price discovery becomes thin and moves can feel exaggerated,” said a senior equities strategist at a major Wall Street firm. Measured risk gauges rose modestly as volatility repriced the odds for near-term economic and corporate growth.

Investor attention quickly turned to the calendar. Tuesday’s slate features the largest U.S. banks — Citigroup, Goldman Sachs, Wells Fargo and JPMorgan Chase — along with BlackRock and Johnson & Johnson. Wednesday brings Morgan Stanley, Bank of America, Progressive and an array of transportation and industrial names; Thursday closes with results from CSX, Interactive Brokers and The Travelers Companies. Analysts say results from lenders will be especially consequential given their large weight in major indexes and their role as windows into credit conditions, lending margins and fee income at a time when tariffs threaten to sap international trade volumes.

Trade policy risk is not just a headline. Tariffs can shift input costs, compress corporate margins and prompt timing changes in inventory and capital spending. For exporters and global suppliers, even talk of higher levies can slow orders and extend delivery timelines. “Earnings that reflect tariff-related margin erosion, or guidance that is more cautious on exports, would be viewed as data — and data trump optimism,” said an economist who follows trade-sensitive sectors.

Market participants will also be watching the tone of guidance. Recent quarters have shown a pattern of companies beating headline revenue and profit expectations while lowering forward outlooks, a dynamic that often undercuts gains. With the S&P 500 hovering near all-time highs, the path of earnings per share growth for the next two quarters could be a decisive factor in whether investors keep buying intermittent pullbacks.

Longer term, the episode underscores a persistent vulnerability: markets remain reliant on accommodative monetary policy, resilient consumer spending and an easing of geopolitical tensions to sustain valuations. A re-escalation of tariffs would raise the probability of slower global growth, tighter corporate margins and a more pronounced repricing of risk assets.

For now, traders say the market’s next moves will be guided by a blend of headline risk and the earnings data stream. If banks and industrials deliver solid beats and upbeat guidance, the dip may be bought quickly. If tariff talk translates into profit warnings or weaker-than-expected trade volumes, the recent patience of buyers could be tested. Either way, this week’s reports will offer a clearer read on whether the market’s advance is durable or dependent on fragile geopolitical calm.