AI-related stocks were weak, but the S&P 500 and Nasdaq both hit new highs last week. Their performance remains in focus at the start of this week ahead of the full-scale start of earnings season, while gains in energy stocks are supporting the market.
U.S. stocks were weighed down by weakness in AI stocks last week, and there were periods when telecommunications stocks declined. However, the S&P 500 reached a record closing high, while the Nasdaq Composite also hit a new high at one point. The market was driven by gains in energy stocks, with Constellation Energy and Vistra among the sharpest risers.
Earnings season for the July-September 2026 quarter is expected to gather pace this week, with aggregate earnings for S&P 500 constituents forecast to rise substantially year on year. Earnings trends among economically sensitive and defensive stocks are expected to be a market focus, against the backdrop of capital spending on equipment for AI data centers and higher crude oil prices.
The market is also being affected by worsening tensions in the Middle East and rising interest rates, but surging utility stocks are providing support. The market's overall resilience was notable last week on gains in energy stocks, and ahead of this week's earnings announcements, investor attention is expected to focus on earnings from major IT companies and whether the S&P 500 and Nasdaq can continue setting new highs.
Key events this week include earnings announcements from the financial and pharmaceutical sectors from 13 October onward, the release of September CPI on 14 October, and PPI on 15 October. With tensions escalating in the Middle East, developments in crude oil prices may continue to affect the market.