The Market Landscape

The recent rally has shown signs of fatigue, with the Dow dropping 2.7% last week while the tech-heavy Nasdaq managed to eke out a 0.2% gain. The broader S&P 500 sits at 5,808, down 1% for the week but maintaining an impressive 21.8% gain for the year. Bond yields continue their upward march, with the 10-year Treasury yield reaching 4.20%, reflecting stronger-than-expected economic data and shifting Fed expectations.

The Big Tech Test

This week puts the spotlight on the "Magnificent Seven" tech giants, with Alphabet, Apple, Amazon, Microsoft, and Meta all reporting earnings. These tech behemoths are expected to show 18.1% earnings growth, significantly outpacing the mere 0.1% growth projected for the rest of the S&P 500. Their performance could make or break market sentiment.

Economic Crossroads

Investors will be closely watching three critical economic indicators:

• Q3 GDP growth (expected at 3%)

• Core PCE inflation (projected at 2.6%, down from 2.7%)

• October jobs report (forecasting 125,000 new jobs)

These data points will be crucial in determining whether the economy achieves the hoped-for "soft landing" and whether the Federal Reserve can begin its anticipated rate-cutting cycle in 2025.