PLIB

The S&P 500, Dow Jones, and Nasdaq 100 have pulled back over the past few weeks as investors rotate out of their artificial intelligence (AI) bets. The Dow has dropped 5.35% from its year-to-date high, while the S&P 500 and Nasdaq 100 have fallen 3.27% and 9.57%, respectively. This article looks at the top catalysts to watch this week.

US Stocks to React to Top Tech Earnings

The main theme in the market in the past three weeks has been corporate earnings from some of the biggest companies in the US. FactSet (NYSE:FDS) data shows that 60% of all companies in the S&P 500 Index have published their earnings, with the blended growth rate being 30%.

Earnings season picked up pace last week as Magnificent 7 members Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG), and Microsoft (NASDAQ:MSFT) released their results. Other major companies that reported included Intel, Eli Lilly, Chevron, ExxonMobil, and Mastercard.

The earnings season will continue this week, with some notable tech names publishing their numbers. Apple (NASDAQ:AAPL) and Palantir (NASDAQ:PLTR) will release on Monday, while AMD and Arm Holdings will follow on Tuesday and Wednesday. These earnings will provide more details about the state of American companies. 

US Nonfarm Payrolls Data

The three indices pulled back last week after the Federal Reserve delivered its interest rate decision on Thursday. As was widely expected, the bank left interest rates unchanged between 3.75% and 4%. Officials signaled that they will support hiking rates in the final meeting of the year. 

The most important macro data from the US will be the October jobs numbers. A report coming out on Friday is expected to show that the economy added 63k jobs last month after adding 29k in September. A stronger-than-expected report will raise the possibility of the Fed hiking rates.

These numbers come at a time when US bond yields have pulled back. The ten-year yield dropped to 4.929%, while the five-year dropped to 4.722%.

US Midterm Elections

The Dow Jones, Nasdaq 100, and S&P 500 indices will also react to this week’s midterm elections. Most polls show that Democrats will likely win the Senate and the House of Representatives. The same is true with traders on Polymarket and Kalshi. 

The outcome of this election will have some impact on the stock market. A Democratic sweep will likely lead to prolonged government shutdowns, gridlock in debt ceiling negotiations, and risks to the AI industry. 

US-Iran War and Impact on the Energy Market

US stocks will also react to the potential restart of the US-Iran war. The Trump administration has already told its Gulf allies to prepare for a short and intense war against Iran. Iran, on the other hand, has warned that it will respond harshly to any US attacks. 

Trump may decide to launch these strikes to distract from a Republican loss in the midterm elections. If the war starts, it will likely lead to more volatility in the stock market as oil prices rise.

Image: Shutterstock