Earnings flood, Fed meeting will test rickety AI market rally
SPY•Investors face a busy week of earnings led by Alphabet, Microsoft and Amazon, alongside a Federal Reserve rate decision on Wednesday. Markets were pricing in less than a 10% chance of a rate hike Wednesday, while futures suggested about an 80% chance of a hike in December.
1. Earnings in focus
Results from Alphabet and Microsoft are due Wednesday, followed by Amazon on Thursday, in the busiest week of the reporting season. Investors will focus on the companies’ capital-spending guidance and whether they are seeing returns on their spending; hyperscaler capital spending is expected to total around $800 billion this year.
2. Fed rate outlook
The Federal Reserve is due to announce its rate decision Wednesday. Fed funds futures late Friday suggested less than a 10% chance of a hike at that meeting and roughly an 80% probability of a hike in December.
3. Market concerns
Technology shares weakened after disappointing quarterly reports from Meta and Lam Research, leaving investors wary of the AI trade. Third-quarter S&P 500 earnings were on pace to rise more than 32% year over year, with about one-third of S&P 500 companies scheduled to report during the week.
