Fed decision and Big Tech earnings put Wall Street volatility in focus

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Fed and Big Tech earnings raise volatility risks

Alphabet, Microsoft and Amazon face critical AI spending test

At the same time, earnings season is moving into one of its most important stretches. According to the Morningstar calendar, Alphabet and Microsoft report after the closing bell on October 28, followed by Amazon on October 29.

The central question is whether Big Tech can justify the enormous sums being poured into artificial intelligence and data-center expansion.

The aggregate capital expenditure of the leading cloud providers may be as high as $800 billion in 2026. However, following poor investor reaction to results from Meta and Lam Research, questions have been raised regarding the ability of such investments to yield satisfactory returns.

Earnings beats might not be enough anymore. If the management teams are unable to back up the expectations of future profitability for AI companies, even the earnings beats might find it difficult to deliver gains.

U.S. GDP and PCE inflation data add to market uncertainty

Macroeconomic data will add another layer of risk. According to the Bureau of Economic Analysis calendar, the advance estimate of third-quarter U.S. GDP is due on October 29, alongside September personal income and spending figures, including core PCE inflation, one of the Fed’s key gauges of underlying price pressure.

A strong inflation reading could reinforce expectations for further rate increases and put renewed pressure on growth stocks.

Weak economic data would create a different problem. A slowdown in activity could raise questions over the durability of corporate earnings.

With both outcomes carrying potential downside for equities, the setup leaves U.S. indexes vulnerable to sharp moves in either direction.

Sell-the-news risks rise as Wall Street faces a decisive week

As noted in the recent U.S. market outlook, roughly one-third of S&P 500 companies are scheduled to report this week, while the latest technology selloff has already raised doubts over the durability of the AI rally.

Earnings and Fed policy are not the only factors in play. Investors are also watching geopolitical risks and the U.S. midterm elections on November 3.

Against that backdrop, elevated volatility and sell-the-news reactions remain a meaningful risk. Even strong results from Alphabet, Microsoft and Amazon could be met with profit-taking, particularly if the Fed sounds more hawkish than markets expect.

The coming week could therefore become a major test for the resilience of U.S. equities, with sharp post-earnings moves in the largest technology names potentially spilling across the broader market.

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