Week commencing October 26th 2026
TradeDay Macro Matters
Macroeconomic / Geopolitical developments
- US stock averages mixed in volatile week
- AI spending concerns weigh on tech sector and Nasdaq
- US Treasuries rally to lower yields as safe haven amidst tech worries
- Oil hits a six month high as Middle Eastern tensions escalate
- Earnings come in mixed as US Flash PMI stays solid
- Focus this week remains on earnings, plus the US PCE and Fed meeting
- What's Ahead
US stock averages mixed in volatile week
US stock markets finished the week mixed following several sharp daily moves, as weakness in technology shares offset gains elsewhere. The Nasdaq Composite fell 0.71% over the five sessions, while the S&P 500 declined 0.47%. In contrast, the Dow Jones Industrial Average gained 0.41%, extending its winning streak to three consecutive weeks.
Beneath the headline figures, market leadership continued to shift. Small cap stocks rose 2.00%, outperforming large caps, which fell 0.47%, while value stocks gained 0.79% as growth stocks declined 1.16%. Energy and healthcare were among the strongest sectors, advancing 1.56% and 1.52% respectively, while communication services and industrials lagged.
AI spending concerns weigh on tech sector and Nasdaq
Technology stocks came under renewed pressure as investors questioned whether the enormous sums being committed to artificial intelligence infrastructure will generate sufficient returns. Concerns over financing costs, rising debt and the time required to turn investment into profits triggered a sharp reversal in sentiment late in the week, with the Nasdaq suffering its biggest daily decline since June on Thursday before ending the week 0.71% lower.
Semiconductor shares were particularly vulnerable, with the Philadelphia Semiconductor Index falling around 4% for the week and extending its losses for October. Meta attracted attention after its results reignited concerns about its substantial AI spending plans, while investors are increasingly looking to the major technology companies to demonstrate that investment in data centres and AI services can translate into sustainable earnings growth. The forthcoming results from Microsoft, Alphabet and Amazon could therefore prove important in determining whether confidence in the AI trade can recover.
US Treasuries rally to lower yields as safe haven amidst tech worries
US government bonds attracted demand as investors sought relatively safe assets amid the technology sell off and growing uncertainty over the outlook for AI investment. The benchmark 10 year Treasury yield fell below 5% on Thursday for the first time in around a month, before ending the week close to that level, down from 5.09% to approximately 5.00%. The two year yield also eased, declining from 4.74% to 4.69%.
The bond market rally suggests that investors are becoming more cautious about the outlook for growth as well as the risks surrounding highly financed technology spending. Lower yields can ease pressure on borrowing costs, but the relief may prove fragile while inflation remains persistent and oil prices continue to rise. Markets will be watching the Federal Reserve's forthcoming decision for further guidance on the balance between inflation risks and economic momentum.
Oil hits a six month high as Middle Eastern tensions escalate
Oil prices climbed to their highest levels in around six months, with Brent crude settling at $116.72 per barrel and WTI crude at approximately $103.27. Brent gained around 6% over the week, while WTI rose by 2.3%, as escalating Middle Eastern tensions continued to threaten energy supplies.
Concerns intensified following Houthi attacks targeting Saudi assets and energy infrastructure, alongside continued uncertainty surrounding the Strait of Hormuz, a key route for global oil shipments. With oil prices remaining elevated, investors will be watching closely for any further escalation, as sustained increases could push up transportation and production costs, adding to inflationary pressures.
Earnings come in mixed as US Flash PMI stays solid
The third quarter earnings season continued to produce mixed results, with investors looking beyond headline figures to assess profitability, business outlooks and spending plans. Meta reported record quarterly revenue of around $64.6 billion, up 26% year on year, but its significant AI investment commitments remained a concern, while Tesla's revenue was broadly flat and profitability weakened despite results that beat some expectations. Other major companies, including Netflix, IBM and Texas Instruments, delivered encouraging elements in their results, highlighting the differing fortunes across sectors.
Meanwhile, preliminary October business surveys showed that the US economy continued to expand at a solid pace. The S&P Global Flash Composite PMI eased to 57.6 from 58.4 in September, but remained consistent with robust activity, with manufacturing at 56.0 and services at 57.9. The main concern was pricing: businesses reported the fastest increase in selling prices since August 2022, reinforcing the challenge facing policymakers as economic activity remains resilient while inflationary pressures persist.
Focus this week remains on earnings, plus the US PCE and Fed meeting
Investors face another busy week, with quarterly results from major technology companies likely to dominate attention. Alphabet and Microsoft are scheduled to report on Wednesday, followed by Amazon on Thursday, while Intel and a broad range of companies across other sectors will also provide updates. Given the recent concerns surrounding AI spending, investors will be looking particularly closely at cloud growth, demand for AI services, capital expenditure and evidence that these investments are generating returns.
Monetary policy and inflation will also be firmly in focus. The Federal Reserve is widely expected to leave interest rates unchanged when it announces its decision on Wednesday, 28 October, although its comments could influence expectations for future policy. Thursday's US Personal Consumption Expenditures report, the Fed's preferred inflation measure, is expected to show further price increases, with headline PCE forecast to rise 0.5% month on month and core PCE 0.3%. Together, the earnings reports, Fed decision and inflation data could set the tone for markets as investors assess whether resilient growth can withstand persistent price pressures and rising geopolitical risks.
What's Ahead
Central Bank Watch: It is a busy week for central banks, with the Federal Reserve taking centre stage on Wednesday with its Monetary Policy Statement, Interest Rate Decision and Press Conference. Other key events include the Bank of Canada’s policy announcement on Wednesday, the European Central Bank’s decision on Thursday and the Bank of Japan’s announcement on Friday, with investors closely watching for any signals on the future direction of monetary policy.
Macro Data Watch: The main macro data releases this week are the US PCE inflation data and US GDP data both on Thursday. Some other releases of note are Japanese CPI, Eurozone GDP and German CPI all being released on Friday.
Earnings Watch: The Q3 US earning season advances this week with Alphabet and Microsoft posting earnings on Wednesday and Amazon following on Thursday (three of the Magnificent Seven). Additionally, there are results from Visa, Coca-Cola, Eil Lilly, Mastercard and Intel throughout the week.
Date
Major Macro Data
10/26/2026
Nothing of note
10/27/2026
US Durable Goods Orders, Housing Price Index, Consumer Confidence and New Home Sales Change
10/28/2026
German Consumer Confidence; Fed and BoC Monetary Policy Statement, Interest Rate Decision and Press Conference
10/29/2026
EU Business Climate, Consumer Confidence and Economic Sentiment Indicator; US PCE, GDP, Initial Jobless Claims, Personal Income and Personal Spending; ECB Monetary Policy Statement, Interest Rate Decision and Press Conference
10/30/2026
Japanese CPI, Unemployment Rate and Retail Trade; BoJ Monetary Policy Statement, Interest Rate Decision and Press Conference; German GDP, Unemployment Rate and CPI; EU GDP and Unemployment Rate; Canadian GDP; US Employment Cost Index
Date
Major Earnings Data
10/26/2026
Verizon; Welltower
10/27/2026
Visa; Coca-Cola; HSBC; Novartis; Boeing; Seagate; S&P Global; PayPal
10/28/2026
Alphabet; Microsoft; GE Vernova LLC; KLA Corp; Amphenol; ServiceNow Inc; T-Mobile; Fortinet; ADP; FedEx; eBay; Ford Motor
10/29/2026
Amazon; Eil Lilly; Mastercard; Intel; Merck&Co; Caterpillar; Linde PLC; Gilead; SanDisk; Starbucks
10/30/2026
Exxonmobil Holdings; AbbVie; Chevron
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