Wall Street Week Ahead: Midterm US elections, earnings, jobs data loom for AI-wary stock market
The recent fluctuations in the stock market have been largely attributed to disappointing financial results from tech giants Alphabet and Amazon, both of which have heavily invested in data centers. Additionally, shares of Intel, a semiconductor manufacturer, plummeted nearly 29% on Friday following its earnings report. As a result, the S&P 500 index dropped by 1.8% and the Nasdaq Composite fell by 2.9% on the same day.
The quarterly earnings reports have heightened worries regarding the funding and financial returns necessary to sustain the significant investments in artificial intelligence (AI) that are central to the current bull market in the U.S. The uncertainty surrounding these issues is expected to continue, particularly as major tech players like Apple, AMD, and Palantir are set to announce their results next week. Furthermore, the upcoming midterm elections could have implications for the regulatory landscape affecting AI.
Marta Norton, the chief investment strategist at Empower, a retirement and wealth services firm, commented on the market's current state. "It seems a bit troubled to me, and I think that really stems from the AI fears that seem to be persistent, if not building," she said. "There is still some digestion around what we saw with earnings this week."
The midterm elections taking place on Tuesday will be pivotal in determining whether the Democratic Party can gain control of Congress from the Republican Party, led by President Donald Trump. While Democrats are projected to secure the House of Representatives, the outcome in the Senate remains uncertain. During the initial two years of the Trump administration, Republicans held dominion over both chambers of Congress. The results of the elections could significantly influence various sectors, including defense and healthcare, as any change in the political landscape may impact fiscal spending and ultimately affect asset prices. A Democratic victory could lead to increased regulatory scrutiny, particularly for Wall Street banks and cryptocurrency companies.
In addition to the elections, investors are awaiting earnings reports from key companies such as Apple and AMD, as well as jobs data. So far in 2026, strong earnings have supported equity gains, with over half of the S&P 500 companies having reported their third-quarter results. According to LSEG IBES data, overall earnings are projected to increase by 31.6% for the quarter. However, some companies have faced backlash from investors; for instance, Caterpillar's shares fell by 9% after the company maintained its annual sales growth forecast despite robust demand for its power equipment in data centers.
Apple is set to release its earnings on Monday, with its shares having risen about 27% this year. Other semiconductor firms like AMD and Qualcomm, as well as AI-focused company Palantir, are also expected to report results soon. More than 100 companies from the S&P 500 are scheduled to announce their earnings next week, including notable names like McDonald's, Amgen, and ConocoPhillips.
Next Friday’s employment report for October will provide crucial insights into the state of the U.S. economy. Recent data revealed that the economy grew at its fastest rate in a year during the third quarter, driven by strong consumer spending and increased business investments in AI. The Federal Reserve has also revised its economic outlook positively while keeping interest rates steady.
While AI and related technology stocks have faced challenges, other sectors have shown resilience. The energy and financial sectors, along with defensive groups like utilities and healthcare, reported solid gains in October. Currently, the S&P 500 is up over 10% for the year. Galipeau noted, "The market is much more broad than people generally want to give it credit for."