Midterms, Apple earnings, jobs report. Wall Street faces a big week ahead just as investors dump tech
The U.S. midterm elections are finally here, but investors suspect it will matter little to a market that’s preoccupied with rumblings in the artificial intelligence trade. Early polling and prediction markets data suggest Democrats have a shot at winning majorities in both the House and the Senate. Such an outcome could have wide-ranging implications for government policy, including a potential unwind in defense spending — and maybe greater pricing pressures on pharmaceutical companies. More importantly, it could shape regulation around data centers, which could be consequential for the artificial intelligence trade. But investors are not too worried that Tuesday’s vote will do much to move the market, which remains pinned to the AI trade and incoming earnings. “There’s going to be volatility,” said Mark Malek, investment chief at Siebert Financial. “But I think at the end of the day, there’s just so many other macro themes that are so much more important right now.” The major averages were headed for a losing week on Friday, with tech stocks leading a sell-off following disappointing results from Amazon and Intel . Google-parent Alphabet also plunged 12% on Thursday, its worst one-day decline on record, and dropped another 2.2% on Friday. .SPX 5D mountain SPX 5-day chart The iShares Semiconductor ETF (SOXX) was down 3.5% week to date, after enjoying a brief resurgence at the start of the week. It tumbled more than 10% on Friday. Most of the 11 S & P 500 sectors were headed for weekly gains, however, as traders ducked for cover in things like health care and consumer staples. Coca-Cola and Procter & Gamble were notable outperformers. Amazon was the third hyperscaler after Alphabet and Meta Platforms to report negative free cash flow. That compounded investor worries that the rising debt of the biggest tech companies could signal broader financial stress among smaller companies while financial conditions tighten. Following the news, BTIG chief market technician Jonathan Krinsky warned again that the S & P 500 is vulnerable to a sell-off. He thinks the index will soon test its 200-day moving average, at 7,306, which represents a more than 5% slide from where it closed Thursday. That worry will loom over investors, as they watch for incoming earnings results. There are 138 S & P 500 companies set to report next week. That includes Apple and other major AI companies such as Palantir Technologies . The third-quarter earnings season has proven to be strong, but that’s not thanks to the “Magnificent Seven” — which has hardly been magnificent of late . The S & P 500 is still projected to post earnings growth of about 30% for the third quarter, per FactSet. However, companies on average are only beating earnings expectations by 1.4%, far lower than both the five- and 10-year averages of 7.5% and 8%. That drop is almost entirely due to Meta Platforms’ and Alphabet’s disappointing reports, according to John Butters, senior earnings analyst at FactSet. Apple earnings Poor results from the hyperscalers raise the stakes for Apple, the Magnificent Seven stock that is breaking away from the pack. Not only is the iPhone maker the best performer of the group — shares are up 28% year to date — it’s also zeroing in on Nvidia’s market capitalization and could soon win back the title of the world’s most valuable public company. Apple is also starting to prove how it can differentiate itself in an era of greater AI adoption, as its buzzy new iPhone Duo that hit stores Oct. 23 could help the tech company revive its flagging hardware business. On Friday, however, Bank of America analyst Wamsi Mohan warned there could be trouble on the horizon for Apple as well, with the bank removing the stock from its US1 list of best investment ideas. Mohan wrote that he has a “more conservative outlook” than the Street, given the potential impact that a staggered launch of iPhones could have on gross margins. ‘Things that go bump in the night’ There are other hurdles for the market ahead, including the October jobs report. While on the surface the labor market has continued to exhibit strength, there are widening chasms beneath that are worrisome for a consumer already beset with higher prices. The U.S. is expected to have added 55,000 jobs in October, with the unemployment rate holding steady at 4.2%, per FactSet. That would be an improvement from the prior month when the employment picture worsened to just 29,000 nonfarm payrolls. Other macroeconomic threats in the form of higher interest rates and yields, greater inflation and oil prices, continue to persist. But many investors remain constructive on the market. Part of that has to do with the historical pattern. In data going back to 1934, the Dow Jones Industrial Average gained 2.8% in the eight trading days surrounding midterm election days, according to the Stock Trader’s Almanac. And seasonally speaking, traders are headed into the best six months on the calendar for the stock market. November is the No. 1 month for the Nasdaq during midterm election years, with the tech-heavy index rising 3.5% on average, according to the Stock Trader’s Almanac. It’s the second best month for both the Dow and the S & P 500 in midterm election years; the indexes average monthly gains of 2.6% and 2.7%, respectively. “If you had to say today, ‘Mark, are you buying or selling?’ I’m buying,” Malek said, adding: “But just also increasing my inventory of things that go bump in the night.” Week ahead calendar All times ET. Monday, Nov. 2 9:45 a.m. S & P Global PMI Manufacturing final (October) 10:00 a.m. Construction Spending (September) 10:00 a.m. ISM Manufacturing (October) Earnings: Apple , Clorox , Palantir Technologies , Vertex Pharmaceuticals , On Semiconductor , Diamondback Energy , Public Service Enterprise Group , Marriott International , The Estee Lauder Companies , Entergy Tuesday, Nov. 3 Election Day 8:55 a.m. Redbook (10/31) 10:00 a.m. Core Capital Goods Orders Growth Monthly final (September) 10:00 a.m. Durable Orders ex-Transportation final (September) 10:00 a.m. Durable Orders final (September) 10:00 a.m. Factory Orders (September) 10:00 a.m. JOLTS Job Openings (September) Earnings: Prudential Financial , Advanced Micro Devices , Block , Booking Holdings , Super Micro Computer , Mosaic , International Flavors & Fragrances , Arista Networks , Amgen , Assurant , American International Group , Sysco , Yum! Brands , Keurig Dr. Pepper , Broadridge Financial Solutions , Pfizer , Zebra Technologies , Apollo Global Management , DuPont de Nemours , Marathon Petroleum , Fiserv , Fidelity National Information Services , Expeditors International of Washington , Archer-Daniels-Midland Wednesday, Nov. 4 8:15 a.m. ADP Employment Survey (October) 8:30 a.m. Trade Balance (September) 9:45 a.m. S & P Global PMI Composite final (October) 9:45 a.m. S & P Global PMI Services final (October) 10:00 a.m. ISM Services (October) Earnings: CF Industries , Costco Wholesale , Allstate , McKesson , TKO Group Holdings , Corpay , Applovin , Aflac , Expedia Group , Qualcomm , Texas Pacific Land Corp. , News Corp. , Motorola Solutions , MetLife , Host Hotels & Resorts , DoorDash , Coherent , Albemarle , APA , Edwards Lifesciences , Insulet , McDonald’s , The Kraft Heinz Company , Datadog , Uber Technologies , Zimmer Biomet , CVS Health , Stanley Black & Decker , Martin Marietta Materials , Emerson Electric Thursday, Nov. 5 8:30 a.m. Continuing Jobless Claims (10/24) 8:30 a.m. Initial Claims (10/31) 8:30 a.m. Unit Labor Costs preliminary (Q3) 8:30 a.m. Productivity preliminary (Q3) Earnings: Simon Property Group , Devon Energy , Lumentum Holdings , Axon Enterprise , Akamai Technologies , Wynn Resorts , Microchip Technology , Live Nation Entertainment , Consolidated Edison , Airbnb , Sempra , Ralph Lauren , Parker-Hannifin , Rockwell Automation , Duke Energy , ConocoPhillips , Viatris , Global Payments , Tapestry , Iron Mountain , Cardinal Health , Kimberly-Clark , Cigna Group , Air Products & Chemicals , DTE Energy Friday, Nov. 6 8:30 a.m. Nonfarm Payrolls Report (October) 10:00 a.m. Michigan Sentiment preliminary (November) 3:00 p.m. Consumer Credit (September) Earnings: Franklin Templeton , Vistra , Charter Communications , Humana , Moderna
