Earnings Flood and Fed Policy: A Critical Week for Markets Lies Ahead

Key Highlights:

• Asian markets were cautious ahead of a busy week of central bank decisions and corporate earnings, with investor confidence in the AI boom under scrutiny.
• Japan’s Nikkei fell 0.8% for a third straight session, closing at its lowest level since July 30, while the Topix gained 0.18%. Chinese markets also weakened: the Shanghai Composite slipped 0.2%, and the CSI300 fell 0.5% by midday, as technology stocks lagged.
• European shares rose slightly on Monday, regaining some of the previous week’s losses as oil prices fell amid diplomatic efforts to ease Middle East tensions. Investor caution persisted ahead of major technology company earnings and key central bank decisions.
• Oil pulled back from near six-month highs amid hopes of easing US–Iran tensions, though attacks affecting Saudi Arabia remained a concern.
• Gold rose 0.3% as lower oil prices eased inflation worries and investors awaited the Fed’s decision. That followed a 4% weekly drop, the steepest since June.
• Apple has reportedly asked suppliers to ramp up production of the iPhone Duo as demand grows for the company’s first foldable phone, Taiwan’s Economic Daily reported Monday.
• Elon Musk said Sunday that SpaceX secured $40 billion in debt financing for graphics processing units, highlighting the steep cost of expanding AI computing capacity. In a post on X, he credited the financing with the company’s investment-grade status and revenue from its Starlink satellite internet and launch businesses.

Dow Jones and S&P 500 index futures were trading slightly higher early on Monday while Nasdaq futures were fluctuating.

As investors look ahead to a busy week, Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), SanDisk (NASDAQ:SNDK) and Eli Lilly (NYSE:LLY) are among the companies that will be reporting earnings, but the Federal Reserve will also be meeting.

The major U.S. indices ended the week in a mixed manner. The Dow Jones Industrial Average rose 0.41% to 52,215.16 marking its highest growth in points and percentage over the last three weeks since it ended Aug.14. The index is now up 8.6% year-to-date.

The S&P 500 fell 0.5% to 7,623.68. This has been its steepest fall in the last two weeks since the week ending on March 27. The Nasdaq Composite fell 0.7% to 25,955.34. This is the largest percentage loss over the last two weeks. However, the S&P 500 index is still up 11.4% this year and the Nasdaq has gained 11.7%.

US Economic Data and Earnings Calendar:

This week, the focus will be on Wednesday’s Federal Reserve policy update and Chairman Kevin Warsh’s news conference. Markets see little chance of another rate hike now but expect a possible move on December 9. Inflation remains above target, though it is not being driven by the labor market, which may give the Fed room to tighten gradually. Warsh said the latest hike had removed “a dose of accommodation.” Investors will also be watching whether financial conditions remain too loose as bond yields rise for neocloud AI data-center companies.

On Thursday, economists expect new figures to show the economy grew faster in the third quarter, with GDP rising to 3% from 2.2% in the second quarter. The report will also include the core PCE price index, the Fed’s preferred inflation measure, which is expected to show inflation picking up to 3.1%.

Alphabet, Microsoft, and Amazon—three of the Magnificent Seven’s largest companies—will report quarterly results, bringing Big Tech’s substantial AI investments into focus.

Alphabet and Microsoft are set to announce results after markets close on Wednesday, while Amazon will report on Thursday.

Investors will be looking beyond earnings to see whether AI spending is fueling growth. Cloud performance, AI revenue, and capital expenditures will be closely watched as Wall Street assesses whether the companies can sustain their current investment pace.

Economic Calendar: Week of Oct 26-30, 2026

https://www.investing.com/economic-calendar, a more detailed calendar

Key Earnings Calendar: Week of Oct 26-30, 2026

https://www.investing.com/earnings-calendar, a more detailed calendar

Investors Weigh AI Spending Against Returns

Investors should stay cautious as mixed market signals; a busy earnings season and other major news unfold over the next two weeks.

Microsoft (MSFT), Alphabet (GOOGL),and Amazon (AMZN) will be closely watched for clues about the outlook for AI investment. Investors want to know whether hyperscalers will keep spending heavilyand whether that spending will deliver meaningful returns. Meta reported strong results and slightly increased its capital-spending plans but also recorded its first cash burn since going public in 2012. Microsoft shares have performed better than those of the other hyperscalers, possibly reflecting its strong cash flow in the second quarter.

Alphabet: Cash Flow and Spending in Focus

Alphabet reports Q3 results Wednesday after the close. Analysts expect earnings per share to rise 6% to $3.03 and revenue to increase 25% to $127.9 billion, with investment gains potentially boosting results. Investors will focus on the company’s 2027 capital-spending and free-cash-flow outlook, as forecasts call for spending to climb 52% to $305 billion. They will also watch for signs that AI agents could threaten Google’s core search-ad business.

Intel and Amazon: Investors Weigh Growth Against AI Costs

Intel’s (NASDAQ:INTC) Thursday results will spotlight its foundry turnaround, with investors watching for CPU-led growth and progress in winning chipmaking customers. Amazon is expected to post 12% revenue growth, including 37% growth at AWS, while earnings remain nearly flat. Its projected $220 billion in AI-related spending this year is pressuring free cash flow and investor sentiment.

Boeing and Eli Lilly Earnings in Focus

Boeing’s (NYSE:BA) Tuesday report will test confidence in its turnaround, with analysts expecting a narrower loss and modest revenue growth. Investors will also weigh recent defense-contract wins and 737 Max 10 certification against a decline in Q3 aircraft deliveries.

Eli Lilly reports Thursday as investors look for continued demand for its weight-loss and diabetes drugs. Analysts forecast $22.58 billion in sales, including $5.05 billion from Zepbound and $10 billion from Mounjaro.

Weekly US Indices Probability Map:

• The U.S. weekly market probability map for Oct 26-30, 2026.
• This is the busiest week of earnings season!
• "The market can stay irrational longer than your capital can survive".
• Sentiment readings are derived from a historical data-based scoring system including geopolitical risk.

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Ali Merchant is a seasoned financial market professional with expertise in Technical Analysis, Treasury & Capital Markets, Trading, Sales, Research, Training, & Fund Management. He is the founder of www.twtlearning.com providing financial education, research, and advisory services to fund & hedge fund managers and family offices.

He has been trading FX, FX options, US stocks & options, Indices, Commodities & Oil, and Metals Futures. He has a CMT charter, an AAPTA membership, and a CMT Canada membership. He has worked in various roles and organizations in North America and the GCC, such as ABN Amro bank, Thomson Reuters, Refinitiv, MAK Allen & Day Capital Partners, and Bridge Information Systems.

He is regarded as an excellent mentor and has trained more than 2000+ users in North America, Gulf countries & Asia on financial markets & products, active and passive trading, and technical analysis strategies. He emanated technical analysis daily and weekly reports for BridgeNews Chicago bureau and updated technical analysis reports on Bloomberg and Reuters while working with ABN Amro bank treasury & capital markets. Has moderated and produced technical analysis reports for Thomson Reuters (Refinitiv) users’ chat rooms and trained users on technical analysis techniques and models. Conducted TA & Global Markets outlook workshop with central banks, sovereign funds, global & regional banks & family offices.