(Oct 28) : A rally in technology companies lifted stocks ahead of this week’s results from industry giants valued at more than US$10 trillion, with traders also bracing for the Federal Reserve rate decision.

Renewed enthusiasm around artificial intelligence drove a closely watched gauge of chipmakers up 3.6%. The Nasdaq 100 added 1.3%. Meta Platforms Inc.’s US$25 billion share sale ended five times oversubscribed. Oracle Corp. is expanding a partnership with OpenAI. United Parcel Service Inc. climbed on a solid outlook. Boeing Co. sank 11% after cutting its delivery target.

In a volatile session, Brent oil settled below US$114 as traders weighed moves to de-escalate tensions in the Persian Gulf. Bonds barely budged. The dollar rose.

Three of the world’s biggest companies — Alphabet Inc., Microsoft Corp. and Amazon.com Inc. — are expected to show healthy growth when they report earnings this week. But for Wall Street, what matters is: How much they’re spending on AI and when the investment will pay off in a meaningful way. 

Not all big techs should be treated equally regarding potential growth, according to Chris Brigati at SWBC.

“The period of a rising market lifting all stocks has started to shift,” he said. “Future expectations are more focused upon execution risk and how much future success is already embedded in the current stock price.”

Meantime, US policymakers will likely keep rates steady on Wednesday, opting to bide their time before potential further increases.

Fed Chair Kevin Warsh, who’s eschewed guidance on future moves, will face a tricky test at his post-meeting conference. He probably won’t offer much insight about December, but may also not want to sway market bets away from the current expectation for a hike.

All in all, economic data suggest there’s no good reason to delay tightening, according to Jerry Tempelman at Mutual of America Capital Management. But by having signaled it intends to wait until December, the Fed has now more or less “boxed itself in,” he added. That means it would surprise markets if it were to lift rates on Wednesday.

“We think an increase at the end of the year is likely, with one further rate hike anticipated for 2027, as the central bank looks to combat inflation and lean against any acceleration in growth,” said James McCann at Edward Jones.

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