Markets Head Into November With Tech Earnings Week and Fed Decision Looming

Wall Street entered November on Friday with investors positioning ahead of a critical week that will test whether technology stocks can recover from October's sharp selloff as earnings season intensifies and economic data arrives.

The S&P 500 closed October with its worst weekly performance since June, weighed down by concerns about artificial intelligence spending after Amazon and Intel reported earnings that raised questions about the sustainability of massive capital expenditures. Friday's trading reflected cautious optimism as investors await the next wave of tech earnings reports scheduled for early this week.

Major technology companies are set to report quarterly results in the days ahead, with particular attention focused on companies that have benefited from AI infrastructure investments. The market's reaction to these earnings will provide insight into whether the recent selloff represented profit-taking or the beginning of a broader reassessment of AI valuations.

The Federal Reserve's October meeting last week resulted in a decision to hold interest rates steady at 3.75 to 4 percent, but Chair Warsh's comments kept December rate hike expectations alive. Markets are trading with the assumption that another 25 basis point increase remains on the table if inflation data justifies additional tightening.

Treasury yields have stabilized near 5 percent following their October surge to 22-year highs, providing some relief to equity valuations. The benchmark 10-year Treasury note's yield movements will be closely watched this month as investors gauge whether bond markets are pricing in sustained economic strength or increased recession risk.

The jobs report scheduled for November 6 represents the next major economic data point that could influence Fed policy. September's disappointing employment numbers gave the central bank pause last month, but any signs of labor market strength in October could reignite inflation concerns and support the case for continued rate increases.

Gold prices hovered near $4,000 per ounce as November began, down from recent highs as the dollar strengthened following the Fed's hawkish tone. The precious metal faces headwinds from elevated real interest rates but continues to attract safe-haven demand amid geopolitical uncertainty.

Mortgage rates remain above 7.4 percent following the Fed's most recent actions, keeping pressure on the housing market as buyers face affordability challenges not seen in over two decades. The gap between mortgage rates and Treasury yields has widened as lenders price in additional credit risk.

The coming week will test whether investors can look past October's volatility and focus on corporate fundamentals, or whether concerns about stretched valuations and elevated interest rates will drive further rotation away from growth stocks into more defensive sectors.