Magnifying glass showing the words Pre Market by Evan_huang via Shutterstock
Markets enter the final week of October riding momentum from Friday’s record highs in U.S. stocks, driven by cooler-than-expected September inflation data that reinforced expectations for continued Federal Reserve rate cuts. The consumer price index rose just 0.3% for the month and 3% annually—both below forecasts—prompting traders to increase odds for additional policy accommodation at upcoming Fed meetings. This week brings an extraordinary convergence of market-moving events: Wednesday’s virtually certain Fed rate cut and Chair Powell’s 2:30pm press conference, a blockbuster earnings lineup featuring all five mega-cap tech giants with Alphabet (GOOGL), Meta (META), and Microsoft (MSFT) Wednesday, followed by Apple (AAPL) and Amazon (AMZN) Thursday, and Friday’s high-stakes meeting between President Trump and Chinese President Xi Jinping at the APEC summit in South Korea. Investors are betting on a U.S.-China trade deal or at least another truce to prevent Trump from implementing the threatened additional 100% tariff on Chinese goods scheduled for November 1. The ongoing government shutdown continues to cast a shadow over federal operations, though critical economic data including Friday’s Core PCE Price Index—the Fed’s preferred inflation measure—remains on schedule.
Here are 5 things to watch this week in the Market.
Fed Rate Cut and Balance Sheet Policy Pivot
Wednesday’s Federal Reserve meeting at 2:00pm represents a virtual certainty for a rate cut, with market focus shifting to Chair Powell’s 2:30pm press conference for insights into the December meeting outlook and potential changes to quantitative tightening policy. Powell is expected to leave the door open for another rate cut in December while potentially signaling an end to the Fed’s balance sheet reduction program that has been shrinking the central bank’s massive asset holdings. The decision comes after Friday’s benign inflation data that showed continued disinflation progress without alarming economic weakness, providing the Fed flexibility to maintain accommodative policy. Powell’s commentary about the impact of recent trade tensions, government shutdown complications, and the sustainability of current economic momentum will be crucial for market expectations about the policy path through year-end. Any hints about pausing balance sheet runoff could have significant implications for liquidity conditions and asset prices, particularly benefiting rate-sensitive sectors and growth stocks. The Fed’s updated economic projections and dot plot will provide additional context about policymakers’ longer-term views on rates and inflation.
Mega-Cap Tech Earnings: AI Investment Validation
The week delivers an unprecedented convergence of mega-cap technology earnings, with Alphabet (GOOGL), Meta (META), and Microsoft (MSFT) reporting Wednesday, followed by Apple (AAPL) and Amazon (AMZN) Thursday. These five companies represent massive market capitalization and have been primary beneficiaries of AI investment narratives, making their results critical for validating current valuations and technology sector leadership. Google’s search advertising trends, cloud growth, and AI integration progress will be closely watched, while Meta’s Reality Labs losses and digital advertising strength will test investor patience with metaverse investments. Microsoft’s Azure cloud growth, AI monetization through Copilot, and enterprise software demand will provide crucial insights into business technology spending. Apple’s iPhone demand in China amid trade tensions and services revenue growth will be particularly important, while Amazon’s e-commerce margins, AWS cloud performance, and advertising business will round out the comprehensive technology sector assessment. Collectively, these earnings could determine whether the AI infrastructure investment thesis remains intact or if concerns about returns on massive capital expenditures begin to pressure valuations.
Trump-Xi Summit: Trade War Resolution or Escalation
Friday’s meeting between President Trump and Chinese President Xi Jinping at the APEC summit in South Korea represents the week’s most significant geopolitical event, with potential to dramatically reshape market sentiment heading into November. The summit occurs just one day before Trump’s threatened implementation of an additional 100% tariff on Chinese goods scheduled for November 1, creating urgency for diplomatic progress. Investors are hoping for either a comprehensive trade deal or at least another truce that postpones additional tariffs and creates a framework for continued negotiations. Any resolution of rare-earth export restrictions, intellectual property concerns, or technology transfer issues could trigger significant relief rallies across sectors most affected by trade tensions. Companies with substantial China exposure will see immediate stock price reactions to summit outcomes, particularly in semiconductors, automotive, materials, and industrial sectors. Conversely, summit failure or further trade war escalation could reignite volatility and pressure growth-sensitive stocks. The timing of the summit on Friday creates potential for weekend headline risk, though many investors may position defensively ahead of the meeting given the binary nature of potential outcomes.
Energy Sector and Economic Growth Assessment
Friday’s earnings from energy giants Exxon Mobil (XOM) and Chevron (CVX) will provide crucial insights into oil and gas market conditions, capital allocation strategies, and management perspectives on energy demand amid economic uncertainties. The results will offer perspectives on refining margins, upstream production economics, and the impact of geopolitical tensions on energy markets. Thursday’s Q3 GDP report at 8:30am will provide the first comprehensive look at third-quarter economic growth, offering critical context for Fed policy decisions and investor assessments of economic momentum heading into the final quarter. The GDP reading will be scrutinized for contributions from consumer spending, business investment, and net exports that together determine economic health. Monday’s durable goods orders and new home sales data, along with Tuesday’s consumer confidence report, will provide additional economic perspectives on business investment intentions and household sentiment. The convergence of energy sector earnings and economic growth data creates a comprehensive assessment of both sectoral health and broader economic conditions.
Inflation Trajectory and Year-End Positioning
Friday’s Core PCE Price Index at 8:30am represents the Federal Reserve’s preferred inflation measure and will be closely watched for confirmation of the disinflation trend evident in last week’s CPI data. Both month-over-month and year-over-year readings will be analyzed for evidence that inflation is sustainably returning to the Fed’s 2% target or if any concerning price pressures remain. The report comes after Wednesday’s Fed decision and could either validate the central bank’s policy path or raise questions about the appropriate pace of accommodation. Friday’s Chicago PMI will provide additional perspective on business conditions and pricing pressures in the manufacturing sector. The combination of inflation data, Fed policy decisions, mega-cap tech earnings, and the Trump-Xi summit creates an extraordinarily complex backdrop for year-end portfolio positioning. Investors will need to balance optimism from dovish Fed policy and potential trade war resolution against concerns about economic growth sustainability and whether AI investment returns can justify current technology valuations. The week’s outcomes could significantly influence sector rotation decisions and risk appetite heading into the final two months of 2025.
Best of luck this week and don’t forget to check out my daily options article.
On the date of publication,
Gavin McMaster
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
For more information please view the Barchart Disclosure Policy
here.
