Tech stocks stumbled. Now comes a crucial week for Wall Street.
Summary
Following a recent decline in technology shares, Wall Street faces a critical period of corporate earnings announcements. These upcoming financial reports will help reveal whether investors are losing confidence in the major companies that previously drove the market rally.
Wall Street heads into one of the busiest weeks of earnings season after tech's worst week since June. The Nasdaq fell 4.5% last week as worries about AI spending, debt and rising interest rates hit chipmakers and software alike, and AI cloud provider CoreWeave (CRWV) lost about 25%. Even so, the S&P 500 sits only about 1% below the record it set earlier this month and is up roughly 13% for the year.
The calendar is heavy. Netflix, GE Aerospace, General Motors, 3M and RTX report Tuesday. Lam Research and Texas Instruments follow on Wednesday, with Meta Platforms and Tesla after the close. Procter & Gamble reports Thursday before the open. Analysts expect S&P 500 third-quarter earnings to grow more than 30%, according to LSEG data.
The big question is AI spending. Goldman Sachs expects five hyperscalers to raise capital spending to about $1.2 trillion next year, and investors want proof that profits can keep pace. With the 10-year Treasury yield above 5% and futures leaning toward another Fed hike by December, that buildout is getting more expensive to fund. Deutsche Bank and RBC Capital Markets have both pulled back on their tech sector calls.
The Fed is in its quiet period until Oct. 29, so earnings, not Fed speakers, should drive the tape. On the data side: housing starts Tuesday, jobless claims Thursday, flash PMIs late in the week and University of Michigan consumer sentiment on Friday. Futures bounced Monday morning, with Nasdaq 100 futures up about 1.1% and a chip ETF up around 3% premarket, on track for its first gain in 10 sessions.
Sources: MarketWatch · Reuters via Business Recorder · Gotrade · CoinDesk · Webull market data
Our Take
A premarket bounce after a 4.5% down week is not a trend change. This rally has to survive Wednesday night. Meta is the real test: if it raises capex again without showing revenue growing faster than spending, the market has made it clear this month that it will punish that, and the hit will spread to chips and AI infrastructure names. If Meta shows the spending is paying off, the "AI is overbuilt" story loses steam and the semis that were sold hardest have room to snap back.
For day traders, the setup changes through the week. Monday and Tuesday carry gap-and-fade risk: a gap up into resistance after a big down week often gets sold, so let the first 15-30 minutes settle before chasing. Wednesday afternoon, expect thinner action as traders square up before META and TSLA. Thursday is where the real move should come.
Levels we are watching:
- QQQ is near $719 premarket vs. Friday's $709.80 close. Resistance is $725-728 (Friday's open and Thursday's close); support is Friday's $707.23 low. Holding above $720 after the open would be the first sign buyers are back. Falling back under $710 puts Friday's low in play.
- SMH is near $556 premarket (+3% vs. the $539.79 close), already inside the $551-555 resistance zone. Clearing $555 and holding opens room higher; a rejection there looks like a dead-cat bounce.
- SPY is near $767 vs. a $763.25 close. Support is Friday's $760.64 low; the record area near $781 is the upside target.
Lam Research and Texas Instruments on Wednesday matter for the chip group. Both are up about 60% this year, so the bar is high.
Opinion of Tech & Money Press. Not financial advice.
Opinion of Tech & Money Press. Not financial advice.
Source: Read the full story at MarketWatch.com - Top Stories