“We need to see these companies deliver robust results,” said Eric Beiley, executive director of wealth management at Steward Partners, “because stocks are trading at very high valuations.” Tech’s continued dominance contrasts with the Russell 2000 index of small-cap stocks, which fell 3% last week, highlighting investors’ cautious approach amid high rates.
High-Stakes Week Ahead for Markets with Election, Rate Concerns, and Big Tech Earnings
The U.S. stock market’s recent rally could face its toughest test this week amid a range of economic and political risks. Key events on the horizon include earnings reports from major tech companies, uncertainty in U.S. debt markets, Friday’s jobs data for October, and the final days leading up to a contentious presidential election.
“It’s a tossup that’s definitely bothering the rates market,” says Dec Mullarkey, head of investment strategy at SLC Management, regarding the election’s impact on markets. “The 10-year yield has surged in the past month,” he added, noting that heightened election anxieties are evident in both Treasury and gold markets, particularly given polls showing a tight race.
Big Tech Earnings: A Crucial Week
Despite a recent dip, the S&P 500 index remains underpinned by strong tech performance. This week brings anticipated earnings from the “Magnificent Seven” tech giants, including Alphabet on Tuesday, followed by Microsoft and Meta on Wednesday, and Apple and Amazon on Thursday. Nvidia will report later on November 20.
“Big tech could be a trick or a treat,” observed Keith Lerner, co-chief investment officer at Truist Advisory Services, noting that Apple and Amazon’s earnings release will coincide with Halloween—a historically volatile day, falling within month-end portfolio rebalancing.
Focus Shifts to Jobs Data
As Fed officials look to balance inflation with a steady labor market, Friday’s monthly jobs report for October will be closely watched. Striking workers and recent hurricanes could skew the data, but any surprise could influence Fed policy. September’s strong jobs report calmed fears of a potential downturn, though rising wages pose risks to inflation management.
“It will have some impact, unless we see a large positive or negative reading,” says Lerner. “The jobs report will likely dominate attention for a day—then all eyes turn back to the election.”
Election Tensions and Debt Market Volatility
Despite U.S. economic resilience, election concerns have fueled volatility in the debt market. With Treasury yields recently spiking, borrowing costs are rising for consumers and businesses alike. Both Vice President Kamala Harris and former President Donald Trump have limited plans to address the deficit, and Trump’s calls for tariffs and dollar penalties raise additional uncertainties.
Increased gold buying by global central banks amid election risks has driven the metal’s price to record highs. Mullarkey suggests this trend could continue as a hedge against postelection uncertainties.
With the major indexes slightly down, election anxiety looms as a significant factor that may affect both debt markets and commodities as the week progresses.
