Stocks end a volatile week on the back foot
US equities closed the week of 19-23 October mixed. The Dow Jones Industrial Average finished at 52,215.16, up 0.41% on the week, while the S&P 500 closed at 7,623.68 (-0.47%) and the Nasdaq Composite at 25,955.34 (-0.71%). On Friday, most S&P 500 sectors fell, led by consumer staples and financials, while energy climbed 2.4% to a record high.
What moved individual stocks
American Express fell 3.9% even after raising its profit forecast and announcing a 5% workforce cut.
SLB rose 6.7% after beating third-quarter profit estimates.
AT&T and T-Mobile each dropped more than 6%.
Kristina Hooper, chief market strategist at Man Group, said there is "still fallout from the questioning of the AI trade", adding that investors may see less spending on AI data-center buildouts next year than previously projected.
The week ahead: Fed, big tech and inflation data
The Federal Reserve announces its decision on Wednesday 28 October, followed by a press conference from Chair Kevin Warsh. FedWatch pricing shows an 88% probability of no change this week, but futures imply roughly an 80% chance of a hike in December. The Fed raised rates in September, its first increase since 2023.
About a third of S&P 500 companies report next week. Alphabet (Wednesday 28 October) is expected to post earnings of $3.00 per share on revenue of $127.9 billion, up 24.9%, and Microsoft earnings of $4.71 per share. Amazon (Thursday 29 October) is expected at $1.96 per share on $202.2 billion of revenue, up 12.2%. Hyperscaler capital spending is expected to total about $800 billion this year, so capex guidance will be watched as closely as profit.
On Thursday 29 October, core PCE inflation and advance third-quarter GDP are due. The consensus is for core PCE of +0.3% month on month (previous reading 0.2%) and GDP growth of 3.2% quarter on quarter (previous 2.2%). Third-quarter S&P 500 earnings growth is on pace for more than 32% from a year earlier, according to LSEG IBES.
What it means for investors
Consumer sentiment is weighing on the outlook: the University of Michigan index edged down in October to near a record low, with higher prices tied to the Middle East conflict. For investors in the Gulf and Palestine, where most currencies are pegged to or closely follow the US dollar, a possible December hike would mean higher local funding costs and a firm dollar. Record energy-sector levels on Wall Street also reflect the oil-price strength that supports Gulf liquidity.
What to watch
Wednesday 28 October: Fed decision and Alphabet and Microsoft results.
Thursday 29 October: Amazon results, core PCE and advance GDP.
Technical levels cited by FXEmpire: S&P 500 support at 7,592 and resistance at 7,845.
