The stock market is bracing for what could be a defining week. Between a key Federal Reserve decision, a flurry of Big Tech earnings, and high-stakes talks between Donald Trump and Xi Jinping, investors are looking for a clean sweep that keeps the rally alive.
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But if history is any guide, only one of those three catalysts truly has the power to move markets, and that’s the Fed.
Rate Cuts Set the Tone for the Week
Last week’s inflation data gave the Fed room to keep cutting rates. The September consumer price index rose 3% from a year earlier, the fastest pace since January but still below expectations. This eased fears that policymakers might hesitate. It also left traders confident that rate reductions are coming both this week and again in December.
Lower borrowing costs remain the market’s biggest tailwind, particularly as growth slows and labor market data softens. “The Fed can afford to stay on the side of easing,” one strategist said, “and that’s what risk assets are counting on.”
Tech Earnings Keep the AI Boom in Focus
Next comes earnings season, where Big Tech’s numbers could decide whether the AI boom still has legs. Microsoft (MSFT), Meta (META), Alphabet (GOOGL), Amazon (AMZN), and Apple (AAPL) all report this week, with Wall Street expecting 13% earnings growth from the group.
So far, S&P 500 (SPX) profits have climbed an average of 9.2% this quarter, led by a 22% surge in the Information Technology sector. That’s been powered largely by chip demand, but investors want to see evidence that the heavy AI investment is translating into stronger cash flow.
Analysts say even a modest miss from one or two tech giants wouldn’t derail the rally, provided the Fed keeps its dovish stance.
Trade Negotiations Are Still Ongoing
Trump’s upcoming meeting with Chinese President Xi Jinping could round out the week with a fresh trade deal. Officials on both sides hinted at “preliminary consensus” over the weekend, covering export controls, agricultural access, and TikTok’s U.S. operations.
Markets are treating the news as a bonus rather than a guarantee. A solid framework would help ease tensions, but investors know how quickly such breakthroughs can unravel. As one analyst quipped, “Trade optimism helps — rate cuts sustain.”
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