Wall Street week ahead: Big tech earnings and Fed decision to test US stock rally

Wall Street investors are bracing for a crucial week as major tech companies release their quarterly earnings and the Federal Reserve announces its interest rate decision. The AI boom, which has driven a significant portion of the U.S. stock market's growth over the past four years, has recently come under scrutiny. Meta Platforms and semiconductor equipment maker Lam Research reported disappointing earnings, raising concerns about investor support for expensive AI projects.

Three other major tech firms - Alphabet, Microsoft, and Amazon - are expected to report results next week, and their earnings will be closely monitored for signs of business growth and profits stemming from AI investments. Approximately one-third of S&P 500 companies are projected to release quarterly reports during the week.

The Federal Reserve's interest rate decision on Wednesday is expected to further impact stock prices. Nick Giorgi, chief equity strategist at Alpine Macro, notes that investors are closely examining technology companies' AI spending and questioning its financial viability. Giorgi believes this cautious approach is healthy but could lead to short-term losses for technology stocks.

The upcoming U.S. midterm elections, where Democrats may gain control of Congress from President Donald Trump's Republican Party, add another layer of uncertainty for financial markets. Despite recent weakness in tech shares, the S&P 500 has gained 11% in 2026, indicating the broader market's strength this year.

Strong corporate profit growth has supported the U.S. stock market, even as higher U.S. Treasury yields and rising energy costs due to the Middle East conflict have increased borrowing costs and expenses for businesses and households. Third-quarter earnings for S&P 500 companies are expected to grow by more than 32% compared to the same period last year, according to LSEG IBES data.

The next two weeks will be the most eventful part of the earnings season, with Alphabet, Microsoft, and Amazon releasing quarterly results on Wednesday and Thursday. Investors will closely scrutinize their future AI spending plans and whether those investments are generating sufficient returns.