A packed earnings calendar and a Federal Reserve policy meeting put U.S. stocks in focus this week. Results from Microsoft, Alphabet, Amazon, Sandisk and Eli Lilly will give investors fresh clues on whether major cloud providers are sustaining their AI investments—and whether that spending is producing returns. Major indexes posted mixed weekly results, briefly regained their 50-day averages midweek and then fell back below them, while AI-related stocks continued to lag many other sectors.
Microsoft, Alphabet and Amazon put AI spending in focus
Results from Microsoft, Google parent Alphabet and Amazon are expected to help investors assess the progress of AI investment by the largest cloud providers. The key questions are whether capital spending remains elevated and whether companies can show revenue and returns to match.
Meta Platforms recently reported strong results and modestly raised its capital spending plans. It also reported its first cash burn since going public in 2012. Microsoft has been relatively resilient among the four major cloud providers, with substantial cash flow through the second quarter, the article noted.
Other major reports this week include Sandisk and Eli Lilly. ServiceNow, Intel, Exxon Mobil, SK Hynix, Chevron, Visa, Mastercard, Caterpillar, AbbVie, Merck, Tenet Healthcare, The Cheesecake Factory and Porch are also due to report. Apple and other companies are scheduled to release results next week.
Major indexes end the week below their 50-day averages
The Dow Jones Industrial Average rose 0.4% last week, while the S&P 500 fell 0.5% and the Nasdaq Composite lost 0.7%. The small-cap Russell 2000 gained 2% but remained below its 200-day average. The equal-weighted S&P 500 ETF (RSP) advanced 1.1% and closed above its 50-day average. The Invesco Nasdaq 100 Equal Weighted ETF (QQQE) finished slightly higher, giving back nearly all of its midweek gains.
Major indexes climbed back above their 50-day averages at one point during the week but slipped below them by Friday. The Dow joined the S&P 500 and Nasdaq below that level. Chipmakers and AI hardware stocks fell sharply, while consumer, financial, transport, housing, software and healthcare stocks generally fared better. Several of those groups pulled back on Friday, including Eli Lilly.
Sector ETFs also diverged. The software ETF IGV, which counts Microsoft among its largest holdings, gained 6%, while the semiconductor ETF SMH fell 2.3%. The ARK Innovation ETF rose 0.4% and the ARK Genomic Revolution ETF added 3.1%. The metals and mining ETF XME dropped 4.5%, while the homebuilders ETF XHB climbed 3.7%. The energy ETF XLE gained 1.6%, the healthcare ETF XLV rose 1.45%, the industrials ETF XLI fell 1.9% and the financials ETF XLF advanced 0.7%.
Fed decision and Treasury yields in focus
The Fed meets this week, with its policy decision due Wednesday afternoon, followed by remarks from Fed Chair Kevin Warsh. Markets expect rates to remain unchanged, while investors will look for signals on whether further tightening could follow. The rate outlook may affect equity valuations and corporate borrowing conditions, alongside the stream of earnings reports.
The 10-year U.S. Treasury yield fell 11 basis points last week to 4.99%, a move the article linked to concerns about financing AI investment. U.S. crude futures rose 4.3% over the same period to $103.27 a barrel. Overnight moves in stock-index futures do not necessarily indicate how the cash market will trade the following session.
Earnings and policy decisions keep sector divergence in view
Markets have remained divided: AI stocks are under pressure overall, while several sectors outside AI posted gains last week. With indexes back below their 50-day averages, investors face a heavy flow of company results and the Fed meeting. Earnings, capital-spending plans and policy signals are the immediate points to watch. The U.S. midterm elections on November 3 may shape the news agenda later, but this week’s focus is on Big Tech results and the Fed’s decision.