Last week's opening round of Big Tech earnings looked solid until Thursday, when sentiment reversed sharply.
SpaceX, Meta, and Tesla reported in succession, and markets initially read the results as a sign that companies would not dramatically ramp up spending next year. But investors soon realized that long-term projects still demand enormous capital, forcing a rapid repricing of expectations that sent the S&P 500 down nearly 2%.
As a result, even though oil prices surged to their highest level since May, the 10-year Treasury yield still fell below the 5% mark.
This week, the Big Tech earnings parade continues: Alphabet (Google's parent company) and Microsoft will report on Wednesday, with Amazon following on Thursday. These hyperscale cloud providers will deliver their latest AI business results, and the market will focus on verifying returns on investment, capital expenditure plans, and actual enterprise and consumer adoption of new technologies.
On the economic calendar, all eyes are on the Fed's rate decision at 2 p.m. on Wednesday. The mainstream consensus is that rates will be held steady, but with the decision falling close to the election, comments from Fed Chair Kevin Warsh could introduce surprises, giving the meeting strong tactical significance.
Fed Decision Before the Election: A Pause Is the Likely Outcome
Welcome to Fed decision week. The Fed's September FOMC meeting delivered the first rate hike in three years, and Warsh and his team still face multiple pressures: inflation above target, renewed tensions with Iran, and intensifying competition for capital in the AI race.
But market pricing favors a pause. Treasury prices rebounded sharply on Thursday, pushing the 10-year yield back below 5% for the first time in weeks, with trading positions heavily adjusted. Current pricing implies a 90% probability that rates will remain unchanged on Wednesday.
Philip Marey, senior U.S. strategist at Rabobank, told clients: "After the September hike, a pause in October has the advantage of allowing more data to be collected before deciding on the next move." Several FOMC members have recently echoed that view publicly: the market is fine for now, and the Fed can afford to wait until the December meeting to make a decision; the market currently prices a 77% probability of a December hike.
Marey believes the highlight of the October meeting will be the divisions within the FOMC vote. Several officials advocate a cautious wait-and-see approach, but Minneapolis Fed President Kashkari, Cleveland Fed President Hammack, and others have recently issued hawkish calls for a hike, arguing that inflation must be addressed as soon as possible.
On one hand, their concerns are well grounded: ahead of the U.S. midterm elections, the risk of a large-scale conflict in the Middle East is rising, and oil prices have climbed sharply; Brent and WTI crude futures have gained 9% and 12% respectively over the past month.
But there are also uncertain variables: Treasury yields have already retreated, inflation, while elevated, is not accelerating out of control, and labor market signals are mixed. Even though the Fed is institutionally independent of the White House, an October hike would be politically very sensitive. Wednesday's decision comes just six days before the midterm elections, which will likely hand Democrats control of at least one chamber of Congress; Trump has made clear he only wants the Fed to cut rates.
With these factors combined, the market widely believes the Fed would prefer to push the hike window back to December.
On September 16, 2026, Fed Chair Kevin Warsh speaks at a Fed press conference in Washington.
Alphabet, Microsoft, Amazon: Three More Big Tech Earnings Reports
On Wednesday, in addition to the Fed decision, two of the "Magnificent Seven" tech giants will report earnings, with Amazon following on Thursday. As in past quarters, the market's focus on these companies is highly consistent: the scale of capital expenditure, whether management raises spending guidance, and the funding sources for massive capital investments.
Tech stocks sold off on Thursday, with the Nasdaq falling more than 1%, and earnings data will face harsher scrutiny as investors begin to question the sustainability of this tech rally.
Deutsche Bank strategist Jim Reid posed a trillion-dollar core question to clients: "Is this just another brief wobble in the AI capex trade, or is the market finally realizing that the size of the spending matters more than future growth promises?"
Market panic has clearly intensified in recent days. Jefferies data shows that tech was the most sold sector by its equity trading desk on Thursday. Capital.com analyst Daniela Hathorn said: "Investors are demanding more and more from AI investments, and the focus has shifted from revenue growth to profitability, capital expenditure, and tangible returns."
Gabelli fund portfolio manager John Belton outlined the key points for each company: for Alphabet, Google Search growth and Google Cloud TPU chip sales; for Microsoft, Copilot seat growth; for Amazon, retail business margins. But what really drives the market are the big macro questions.
Hathorn wrote: "Strong results and optimistic guidance could help restore Nasdaq confidence; but if margins miss expectations and spending continues to be raised, it would further deepen market worries about excessive valuations."
On September 29, 2026, Trump and House Speaker Mike Johnson listen at the White House as Google CEO Sundar Pichai speaks to the media, following a meeting between AI giant executives and the White House.
Investor Sentiment Turns Risk-Averse
Heavyweight tech earnings, a key Fed meeting, the approaching election, and a series of corporate data points mean a large amount of information will land this week. The information matters, but so does the market mood receiving it.
BofA strategist Michael Hartnett judges that current sentiment is negative. After years of strong tech gains, most portfolios are already heavily weighted in risk assets with high exposure. Recent debt and spending concerns, election uncertainty, and the Iran conflict pushing oil prices higher with no sign of easing have led investors to want to protect their gains.
Hartnett warned: "Get ready, the trade of lower yields, lower stocks, and a weaker dollar may be about to play out."
Of course, there is still the possibility of positive news.
Economic and Earnings Calendar
Monday
Economic data: Chicago Fed National Activity Index (September, expected -0.1, prior -0.04); Dallas Fed Manufacturing Activity Index (October, prior 9.8).
Earnings: Verizon, Welltower, Cadence Design Systems, Nucor, Public Storage, Amkor Technology.
Tuesday
Economic data: ADP weekly employment change (week ended October 10, prior +18,500); September durable goods orders preliminary (expected +1.7%, prior -0.1%); FHFA House Price Index August month-over-month (expected +0.1%, prior +0.3%); Conference Board Consumer Confidence Index (October, expected 80.5, prior 81.9); Conference Board Present Situation Index and Expectations Index; Richmond Fed Manufacturing Index and Business Conditions Index; September new home sales month-over-month (expected -5.5%, prior +6.4%); September building permits final; Dallas Fed Services Activity Index (October, prior -1.8).
Earnings: SK Hynix, Visa, Coca-Cola, HSBC, Novartis, Boeing, Seagate, S&P Global, Corning, HCA Healthcare, Waste Management, Freeport-McMoRan, American Tower, Robinhood, UPS, Sherwin-Williams, Ecolab, Hilton, Illinois Tool Works, Royal Caribbean, NXP Semiconductors, Baker Hughes, PayPal, Teradyne, Centene, EQT, CenterPoint Energy, SoFi.
Wednesday
Economic data: FOMC rate decision; MBA mortgage applications (week ended October 23, prior -5.3%); September advanced goods trade balance (expected -$130.5 billion, prior -$132.1 billion); September retail inventories month-over-month (prior +0.2%); September wholesale inventories preliminary (expected +0.4%, prior +0.5%).
Earnings: Alphabet, Microsoft, GE Vernova, KLA, Amphenol, ServiceNow, T-Mobile, UBS, ADP, Equinor, Phillips 66, Vertiv, O'Reilly Automotive, American Electric Power, Boston Scientific, TE Connectivity, Deutsche Bank, Garmin, eBay, Honeywell Aerospace, United Microelectronics, Ford, Carvana, Biogen, Chipotle, GE HealthCare, Raymond James.
Thursday
Economic data: September PCE price index month-over-month (expected +0.5%, prior +0.3%); core PCE month-over-month (expected +0.3%, prior +0.2%); PCE year-over-year (expected +3.6%, prior +3.4%); core PCE year-over-year (expected +3.1%, prior +3.0%); September personal income (expected +0.3%, prior +0.2%); September personal spending (expected +0.6%, prior +0.9%); real personal spending (expected +0.1%, prior +0.6%); initial jobless claims (week ended October 24, expected 199,000, prior 194,000); continuing claims (week ended October 17, prior 1.782 million); Q3 GDP annualized quarter-over-quarter (expected +3.2%, prior +2.2%).
Earnings: Amazon, Eli Lilly, Mastercard, Intel, Merck, Caterpillar, Shell, Linde, TotalEnergies, Gilead, SanDisk, AB InBev, Bristol-Myers Squibb, Altria, Stryker, Starbucks, Trane Technologies, Howmet Aerospace, Digital Realty, MicroStrategy, Cheniere Energy, Cenovus, Monolithic Power Systems, Vale, Ambev, Xcel Energy, L3Harris, Carrier, Coinbase, D.R. Horton, Roblox.
Friday
Economic data: Q3 employment cost index (expected +0.8%, prior +0.9%); MNI Chicago PMI (October, expected 54.6, prior 58.8).
Earnings: Exxon Mobil, AbbVie, Chevron, AstraZeneca, BP, Sanofi, General Dynamics.
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