U.S. stock market next week outlook: Dense earnings reports combined with the Federal Reserve meeting, AI rally faces another test.

October 24 — US stocks will face the busiest week of this earnings season next week, with about one-third of S&P 500 constituents set to report results, and earnings from tech giants along with the Federal Reserve's interest rate decision will test the recently pressured AI trade. This week, earnings from Meta and Lam Research disappointed investors, and the Nasdaq on Thursday recorded its largest single-day decline since June.

Alphabet and Microsoft will report earnings on Wednesday, and Amazon will disclose results on Thursday. Investors will focus on their capital expenditure guidance and whether massive AI spending is generating returns. Hyperscale cloud companies are expected to spend about $800 billion on capital expenditures this year, but rising financing costs have kept the market wary about the sustainability of that spending scale. Intel, SanDisk, Eli Lilly, Exxon Mobil and other companies will also report earnings next week.

Corporate earnings remain an important factor supporting US stocks. LSEG IBES data show that after more than 100 companies have reported, overall third-quarter earnings for S&P 500 constituents are now on track to grow more than 32% year over year. King Lip, chief strategist at BakerAvenue Wealth Management, believes earnings performance will determine whether this tech stock pullback is a buying opportunity or the start of a deeper correction, and the market needs a new round of strong results to support it.

On the Federal Reserve side, the market expects it to pause rate hikes at Wednesday's meeting. LSEG data show that as of Friday, federal funds rate futures reflected less than a 10% probability of another rate hike at this meeting, but about an 80% probability for the December meeting. The Fed previously implemented its first rate hike since 2023 in September to curb inflation above target. Investors will watch whether Chair Kevin Warsh provides clues on the December policy path at the post-decision press conference.

Meanwhile, with the US midterm elections approaching on November 3, bets that Democrats will regain control of Congress have increased. Reports noted that catalysts such as earnings, the rate decision and the elections may further increase market volatility over the next two weeks.