Is a Market Nightmare Looming for U.S. Stocks?

The S&P 500’s recent dip hasn’t dampened investor enthusiasm for tech stocks, which remain crucial to market performance. This week’s earnings reports from major players—Alphabet on Tuesday, Microsoft and Meta on Wednesday, and Apple and Amazon on Thursday—will be watched closely, with Nvidia reporting later in November.

High-Stakes Week Ahead for Markets with Election Jitters, Big Tech Earnings, and Key Economic Data

The U.S. stock market’s recent record-breaking rally could be tested this week as investors brace for a series of high-impact events. The focus will be on Big Tech earnings, fluctuating U.S. Treasury yields, October’s jobs report, and a tense lead-up to the presidential election.

Dec Mullarkey, head of investment strategy at SLC Management, highlighted the tension in bond markets: “The 10-year yield has surged over the past month,” reflecting worries that the election outcome may drive further volatility. Mullarkey noted that election anxiety is also driving up demand for safe-haven assets like gold, particularly with polls pointing to a close race.

Big Tech Earnings Take Center Stage

“These earnings will be pivotal,” said Eric Beiley, executive managing director at Steward Partners. “Stocks are trading at high valuations, so it’s critical that these companies show strong results.” The reliance on large-cap tech contrasts with weakness in small-cap stocks, as seen in the Russell 2000’s 3% drop last week.

“Big Tech could be a trick or a treat,” observed Keith Lerner, co-chief investment officer at Truist Advisory Services, especially with Apple and Amazon’s results landing on Halloween, a day that often brings volatility due to month-end rebalancing.

October Jobs Report in the Spotlight

Friday’s jobs report will also command attention as the Federal Reserve seeks signs of a balanced labor market—neither too hot nor too cold. However, Boeing worker strikes and recent hurricanes may distort October’s numbers. September’s unexpectedly strong jobs data quelled fears of an economic slowdown, yet persistently high wages could complicate the Fed’s path to rate cuts.

“The jobs report could be the day’s main focus,” said Lerner. “But afterward, all eyes will likely return to the election.”

Election Uncertainty Fuels Debt Market Turmoil

The upcoming election is adding pressure to U.S. debt markets, with Treasury yields on the rise. Yields on 10-year Treasury notes reached 4.23% on Friday, driven partly by uncertainty over how either presidential candidate would handle the U.S. deficit and debt levels.

Some investors, including billionaire Paul Tudor Jones, have raised concerns over potential policies like tariffs and dollar penalties, should former President Trump return to the White House. Mullarkey pointed out that central bank gold purchases are pushing prices higher as investors seek protection from potential post-election volatility.

As this critical week unfolds, markets may see increased volatility as investors navigate a challenging mix of earnings, economic data, and political uncertainty.