Berliner Boersenzeitung - Wall Street faces earnings and Fed tests after turbulent technology-led week

S&P 500, Nasdaq, Dow Jones will look to rebound on Monday as US stock market investors face a pivotal week, with corporate earnings reports led by major AI players and a Federal Reserve meeting posing critical tests for a suddenly shaky market rally. Wall Street's main indexes closed lower on Friday even as technology shares steadied somewhat to end a turbulent week for the market-driving AI trade, and investors looked ahead to a busy slate of corporate earnings and a Federal Reserve interest-rate policy meeting.

On Friday, Dow Jones Industrial Average fell 652.82 points, or 1.23%, to 52,215.16; the S&P 500 lost 39.75 points, or 0.52%, to 7,623.68 and the Nasdaq Composite lost 53.52 points, or 0.21%, to 25,955.34.

US Stocks on Focus

Weakness in technology shares left investors on edge about the state of the AI trade that has driven the US equity bull market that just marked its fourth anniversary.

Alphabet and Microsoft report on Wednesday. Amazon's results are due Thursday. Focus will be on the guidance the companies give on capital spending plans and whether they are seeing returns on the massive outlays. Quarterly reports from chip companies Intel and Sandisk also could influence the AI trade.

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Elsewhere, other high-profile companies set to report next week include drugmaker Eli Lilly, oil majors Exxon and Chevron and industrial equipment giant Caterpillar.

US Midterm Elections 2026, Fed Interest Rate

Investors also have their focus trained on the US midterm elections on November 3, with growing bets that the Democrats will wrest control of the US Congress away from President Donald Trump's Republican party. The series of market catalysts could ratchet up volatility over the next couple of weeks and challenge optimism that has helped lift the benchmark S&P 500 index up 11% in 2026.

The prospect for more interest rate hikes also comes into focus with the Fed meeting. The Fed raised rates in September for the first time since 2023, in an effort to control above-target inflation, but Fed funds futures late on Friday suggested a less-than 10% chance the Fed will hike again when it gives its policy statement on Wednesday, according to LSEG data.

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One factor: Investors are dubious that the Fed will want to increase rates just a week before the midterm elections. However, markets are leaning toward a hike at the next meeting in December, with futures suggesting a roughly 80% probability of such a move then.

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(G.Gruner--BBZ)