Midterms, Jobs Data, and Apple Earnings Test Wall Street This Week: Will Stocks Hold?

This week, Wall Street is navigating a series of significant events, including the midterm elections, a key jobs report, and earnings from Apple. The Nasdaq Composite index experienced a decline of 2% last week, marking its most challenging month since March 2025.

Last week, the Federal Reserve decided to maintain interest rates, with a split among its 12 voting members—two members expressed support for a potential increase. A robust jobs report could raise the likelihood of a rate hike, which might put additional pressure on risk assets that are already feeling the weight of uncertainty surrounding artificial intelligence (AI) investments.

Economists surveyed by Dow Jones anticipate that the nonfarm payrolls report for October, to be released on Friday, will indicate an addition of 55,000 jobs. This report reflects employment trends in the U.S. labor market outside of the agricultural sector. The Fed's divided stance on interest rate hikes makes this jobs figure particularly critical. The CME FedWatch tool, which tracks futures, indicated an 84% probability of a rate hike in December prior to the recent October decision.

In addition to the jobs report, Apple is set to announce its earnings after the market closes on Monday, followed by reports from McDonald's and Qualcomm later in the week.

As for the midterm elections taking place on Tuesday, projections suggest that Democrats may secure control of the House, as reported by CNBC, although the outcome for the Senate remains less certain. Mike Dickson, the head of research and quantitative strategies at Horizon Investments, noted that control of Congress has historically had minimal impact on stock market performance.

Shares related to AI experienced a brief boost early last week, partly due to Anthropic's announcement of its intention to go public through an initial public offering (IPO). However, this momentum was short-lived as both Alphabet and Microsoft provided guidance indicating lower-than-expected capital expenditures. Amazon, on the other hand, maintained its full-year spending outlook.

Meanwhile, the oil market is facing pressure after witnessing a more than 10% increase in prices throughout October. As of late Sunday, West Texas Intermediate (WTI) was trading close to $102 per barrel, while Brent crude, the global benchmark, hovered around $112. Additionally, the ongoing election deadlock in Israel continues to contribute to regional risks that could affect oil traders.

In a related development, Kioxia, a Japanese manufacturer of memory chips, saw its stock drop by approximately 14% on Monday, as the growth in prices for its flash memory products slowed significantly, falling from a 70% increase in the previous quarter to the mid-20% range.

Despite the challenges faced by the tech sector, the Dow Jones Industrial Average managed to gain nearly 2% in October, suggesting a shift in investment towards healthcare and other defensive stocks rather than a complete withdrawal from the market. The upcoming payroll numbers on Friday could further influence whether investors continue to retreat from technology stocks in light of potential rate hikes.