Five things to watch in markets in the week ahead

1. Leadership summit: The White House is set to host a high-stakes meeting between U.S. President Donald Trump and Chinese President Xi Jinping, where topics of discussion will include artificial intelligence and trade. Both leaders have shown interest in addressing these areas since their last summit four months ago, with China's trade volume with the world surging during this period.

Meanwhile, U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng have concluded talks focusing on the establishment of a potential AI safety notification mechanism.

2. AI concerns: Fears around AI safety have grown, prompting Meta CEO Mark Zuckerberg to address these concerns at the company's Connect conference on Wednesday. Despite Zuckerberg's reassurances that competition and liability incentivize AI firms to develop safely, top AI industry executives and researchers have expressed growing alarm over AI's potential existential threat, with some even suggesting it could eradicate humanity by 2030. This has led to calls for increased guardrails and a slowdown in AI development.

3. UN General Assembly: World leaders will convene in New York for the United Nations General Assembly, with AI risks and the Middle East conflict expected to be key focus areas. The 15-member UN Security Council may hold high-level meetings on AI, the Middle East, and the Ukraine war. Xi Jinping will be notably absent, having opted to attend private talks with Trump instead. The gathering comes as questions arise about the resilience of the post-World War Two order and the relevance of the UN itself.

4. Economic data: Investors will closely monitor economic indicators released this week. S&P Global will release a preliminary reading of U.S. business activity in September, with expectations of a slight decrease to 56.0 from 56.5 in August. The manufacturing sector is anticipated to see a decline to 53.4 from 53.9. These data points provide insight into the overall health of the U.S. economy, with the services sector showing strong growth and the manufacturing sector struggling due to supply disruptions related to the Iran conflict.

5. Retail earnings: Costco Wholesale Corporation's fourth-quarter earnings will be disclosed, providing insight into the company's performance in a period of rising energy prices and consumer caution. Despite higher gasoline costs, Costco has managed to boost third-quarter sales, driven by demand for its discounted gasoline and food items.

The retailer's strategy of catering to budget-conscious consumers and controlling food prices has helped mitigate the impact of inflation on its margins. Costco's shares have risen by more than 4% year to date due to these positive developments.