Earnings flood and Fed meeting will test rickety AI market rally
SPY•US investors face a busy week of earnings led by Alphabet, Microsoft and Amazon, alongside a Federal Reserve meeting. Futures indicated less than a 10% chance of a rate hike on Wednesday and about an 80% chance of a hike in December.
1. Earnings in focus
A wave of quarterly results and the Fed’s rate decision are set to test a market rally that has grown shaky after weakness in technology shares. Alphabet and Microsoft report Wednesday, Amazon on Thursday, and the week also includes results from about one-third of S&P 500 companies.
2. AI spending under scrutiny
Investors are watching hyperscalers’ guidance on capital spending and whether their investments are generating returns. Hyperscaler spending is expected to be around $800 billion this year, while quarterly earnings from Intel and Sandisk could also influence sentiment toward the AI trade. Third-quarter S&P 500 earnings were on pace to rise more than 32% year over year, based on results reported so far.
3. Fed rate outlook
The Fed is due to announce its policy decision Wednesday. Fed funds futures late Friday suggested less than a 10% chance of a hike at that meeting, but about an 80% chance of a hike in December. Investors will also watch Fed Chair Kevin Warsh’s comments for clues about the rate path.
