As AI Rally Wobbles, Stock Market's Spotlight Turns to Earnings

3-line summary

• The Philadelphia Semiconductor Index (SOX) has fallen about 12% this month, though it remains up about 57% year to date; the S&P 500 posted its biggest weekly decline since June but stayed about 2% below its record high. Next week brings earnings from Meta (the first major hyperscaler report), Lam Research and Texas Instruments (Wednesday), and SpaceX, Tesla, Netflix, P&G, and GE Aerospace, with S&P 500 Q3 earnings expected to grow more than 30% per LSEG IBES data.
• Goldman Sachs estimates next year's capital spending by five AI hyperscalers at about $1.2 trillion, with investors watching whether that spending translates into revenue; AI-cloud firm CoreWeave's shares fell sharply amid roughly $50 billion in debt, and Deutsche Bank and RBC Capital Markets both cut their tech-sector recommendations.
• Hotter-than-expected inflation data raised the odds of a rate move at the Fed's late-October meeting, though most of the market expects a second hike to come in December; one analyst described the market as 'very much an on-off switch type of market.'

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