S&P 500 Faces Packed Week: Fed Meeting, Mega-Cap Earnings, Anthropic's $2 Trillion Question

More than a third of S&P 500 companies report quarterly earnings this week while the Federal Reserve meets — a stretch MarketWatch editor in chief Mark DeCambre calls the stock market's "biggest test in weeks."

The stakes are visible in the recent numbers. The S&P 500 has fallen for two straight weeks, and the Nasdaq Composite has shed more than 5% over that span. The small-cap Russell 2000 just snapped a six-week losing streak with a 2% gain. Treasury yields have declined for three straight weeks, while oil prices have climbed for five weeks running.

DeCambre's read: some of this looks like healthy broadening after a long stretch of overheated tech buying. "I still think the debt-fueled AI build-out will eventually face a true reckoning," he writes. "But that doesn't necessarily mean this is it." Credit spreads remain relatively contained, earnings expectations are holding up, and demand for AI has stayed strong even as financing risks and market concentration rise.

What does this week actually change for investors?

Three events dominate the calendar. First, Big Tech earnings: Microsoft and Google parent Alphabet report Wednesday, Amazon follows Thursday. The bigger names will show whether enormous AI spending is translating into sufficient growth to justify the bill, DeCambre notes.

Second, the Fed. The two-day monetary-policy meeting begins Tuesday, with the rate decision — likely a hold — due Wednesday at 2 p.m. Eastern. Columnist Michael Kramer argues investors should watch broader financial conditions rather than interest rates for clues on the Fed's next moves, and some economists say Chair Kevin Warsh's reluctance to explain his strategy too often leaves investors guessing.

Third, the data. Thursday brings the first estimate of third-quarter GDP plus September's personal-consumption-expenditures inflation report — the Fed's preferred gauge of price pressures.

The debt behind the AI boom

Elon Musk says SpaceX just secured $40 billion in debt to buy AI chips, even as he warns some AI rivals could face a shakeout. DeCambre calls it a reminder of how much borrowing underpins the AI boom and how unevenly the risks are distributed.

The counterpoint: Evercore ISI's gauge of AI excess is flashing only a moderate 4 out of 10, with credit and earnings still relatively healthy even as market concentration and financing risks rise.

Morgan Stanley remains upbeat on the broader market, with an S&P 500 year-end target of 8,000. But its chief strategist sees potential support for chip stocks as much as 15% below current levels — not a forecast of a 15% decline, DeCambre cautions, but a reminder the selloff may have legs. S&P, Nasdaq and Dow futures pointed to Monday gains.

Anthropic's $2 trillion question

Can Anthropic pull off the biggest IPO ever? The maker of the Claude AI model faces a narrowing window to file paperwork if it wants to go public by Thanksgiving, William Gavin writes. Otherwise, its potentially $2 trillion debut will have to wait.

Global risks stacking up

Middle East tensions are raising shipping costs. Tanker freight rates are climbing amid reports of fresh Houthi attacks against Saudi Arabia, adding to concerns about fuel prices and inflation.

In Brazil, President Luiz Inácio Lula da Silva won a new term Sunday, but rival Flávio Bolsonaro is refusing to concede. Brazilian assets are already under pressure, with currency futures and a Brazil-focused ETF falling in Asian trading.

In France, more than 400,000 people took to the streets over the weekend, sparked partly by anger about the cost of living, with organizers calling for a nationwide strike Nov. 5. French borrowing costs have hit 24-year highs, while safe-seeking investors have helped push Treasury yields lower.

Worth your time

• Relief for the stock-market selloff may come after the midterms — no matter who wins.
• The U.S. economy looks great by one measure, so why are Americans so sour?
• Over 40% of Americans are heading toward retirement 'blind' — with no plan.
• MarketWatch columnist Mark Hulbert explains how AI could widen the growing disconnect between Wall Street and Main Street.
• On personal finance: draining emergency savings to kill credit-card debt can backfire, columnist Aditi Shrikant writes. And a retired reader asks the Moneyist whether it's fair an ex-spouse got $90,000 from a 401(k) in their divorce — the answer: what's fair and what a court rules aren't always the same.

By Friday, investors will have the Fed's message, GDP, the Fed's preferred inflation reading and results from three trillion-dollar-scale tech names. That's enough evidence to judge whether the two-week slide was a healthy reset or the start of something longer.