Stocks Up, Oil Down Ahead of Earnings Blitz, Fed
Published as of: October 26, 2026, 9:11 a.m. ET
(Monday market open) Welcome to the busiest earnings week of the quarter, featuring three Magnificent Seven firms among one-third of all S&P 500 companies sharing results. In addition, investors await meetings of the Federal Reserve and central banks in Europe and Japan. Major indexes rose and Treasury yields fell early as oil slipped despite heightened Middle East tensions, and the struggling chip sector turned mostly green.
With rate hike odds less than 10% according to futures trading, the Fed's thinking at Wednesday's meeting is primary. "We don't expect clear forward guidance from Fed Chair Kevin Warsh, but we'll be looking for some clues around his inflation views and if he thinks the outlook has improved at all since the last meeting," said Collin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). "Incoming inflation data hasn't shown much improvement. We expect a hike in December."
Major indexes fell Friday to end a rough week. The main culprit was crude, up another 4% to a one-month high. Market breadth narrowed as just three of 11 S&P 500 sectors rose, led by energy. Things to watch in coming days include regional Fed surveys, Thursday's Personal Consumption Expenditures (PCE) prices report, consumer confidence, and more housing data, all of which could affect Treasury yields after last week's sharp pullback. Today's calendar is light but Anthropic might plan a public filing for its initial public offering (IPO), Bloomberg reported, affecting chip stocks.
Three things to watch
- Cloudburst next with mega-cap earnings on deck: As Microsoft (MSFT), Alphabet (GOOGL), and Amazon (AMZN) report Wednesday and Thursday, cloud progress looms large. Results could provide more evidence of whether AI investment has paid off after positive signs in the second quarter. Last time out, Alphabet's Google Cloud revenue surged 82% year over year while operating margin expanded. Amazon Web Services (AWS) posted 37% year-over-year revenue growth—its fastest in 18 quarters. And Microsoft Cloud's revenues jumped 26% annually. "The AI trade is entering a more demanding phase, with investors scrutinizing whether future returns justify rising capital commitments," said Alexandra Semenova, financial insights strategist at SCFR. "Pressure on free cash flow, as highlighted by Meta's earnings, is placing sharper focus on the sustainability and financing of that spending." In addition, Oracle's (ORCL) investor day is Wednesday, putting it under scrutiny for its heavy AI-related debt load. So far this earnings season, even solid results and guidance mostly haven't helped AI-related stocks.
- Margin under a microscope: As investors survey mega-cap earnings, considerations include margins, demand, AI monetization, spending, and guidance. The first of those goes beyond so-called "hyperscalers" to all companies harnessing AI. A critical question is whether AI will help them run their businesses more efficiently. If so, it could have broad implications for U.S. gross domestic product (GDP) growth—with the government's first estimate for third quarter GDP due this week. AI could even help ease inflation over time, too, according to Federal Reserve Chairman Kevin Warsh. Better margins can ultimately improve U.S. productivity, with the government's preliminary third-quarter data due November 5. The second quarter saw productivity up 1.4% sequentially as output increased more than hours worked. It rose 2.2% annually. Better margins can reflect improved corporate productivity and support earnings. The overall third quarter S&P 500 net profit margin is seen at 14.9%, according to FactSet, with a large portion from tech. However, few reporting companies this quarter have mentioned solid examples of AI-related margin improvements.
- Choppiness may stick around: Volatility—already on speed dial after last week's crude spike and AI sell-off—could stay elevated until the November 3 U.S. election. "Democrats are heavily favored to win the majority in the House and have a realistic shot at capturing the Senate as well," said Michael Townsend, managing director of legislative and regulatory affairs at Schwab, in his latest WashingtonWise podcast. Whichever party emerges victorious, a key issue for Congress is addressing the debt ceiling, which could be reached by mid-2027. "With an annual budget deficit approaching $2 trillion and the federal debt having crossed the $40 trillion milestone in August, investors are increasingly worried about the impact that will have on the economy and the markets," Townsend said. Traditionally, major indexes often climb post-mid-terms, but past isn't precedent, especially with rate hikes possible. The poster child was the 2018 mid-terms, which occurred during a hiking cycle and saw stocks nearly descend into a bear market. The Cboe Volatility Index (VIX) clawed above 20 late last week after touching that mark just three times in three months.
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On the move
- Chip stocks mostly climbed early after last week's painful trading and despite a 1.5% overnight decline in South Korea's influential market. The exception was CoreWeave (CRWV), down 3% after SpaceX (SPCX) CEO Elon Musk said financing has become difficult for "neocloud" firms, CNBC reported.
- Meta Platforms (META) and Tesla (TSLA), which both got rattled last week by their earnings reports, rebounded this morning by about 2%. Tesla got a boost from Barclays upgrading shares to overweight from equal weight, citing the possible merger opportunity with SpaceX and a stronger core business outlook. Meta announced it plans to sell up to $95 billion in stock to fund bets on AI, Barron's reported, which could be giving AI-related shares a positive tone this morning.
- Clothing and shoe firms including lululemon (LULU) and Deckers Outdoor (DECK) tumbled nearly 5% early after Wolfe Research initiated coverage of lululemon at underperform and Deckers at peer perform. Deckers felt pressure last week after earnings appeared to disappoint.
- Moderna (MRNA) fell another 7% today following leakage last week of cancer vaccine trial results that were positive but not quite as robust as some investors had hoped. Moderna and Merck (MRK) officially released details of the Phase III melanoma trial today.
- Ross Stores (ROST) popped 3% on an upgrade by UBS to buy from neutral. The company's store sales growth momentum can persist beyond this year, UBS said.
- Verizon (VZ) slipped despite earnings beating consensus and subscribership gains. The company expanded its Amazon Web Services partnership with a $2 billion AI infrastructure deal.
- So far, 83% of S&P 500 companies releasing third quarter results beat consensus on earnings per share and 66% topped on revenue, FactSet said. Blended quarterly earnings growth is seen at 29.5% including firms that reported and estimates for those ahead.
- Technically, the SPX hovers above key support between 7,600 and 7,620. A drop below that could accelerate losses, with the index well below its 50-day moving average of 7,699.
More insights from Schwab
Risk assessment: The new episode of Schwab's Financial Decoder features a conversation about what risk really means in one's financial life, why risk extends beyond market volatility, and how an investor's goals and circumstances can shape the risks that matter most.
Traders corner: Schwab's Weekly Traders Outlook features key charts, technical levels, and sentiment that might move markets. "Sentiment around tech and the AI complex remains challenged," said Nathan Peterson, director of derivatives research and strategy at SCFR. However, chip stocks could bounce after the PHLX Semiconductor Index (SOX) found support at its 200-day moving average last week.
Chart of the day
Data source: Nasdaq, Cboe. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
For months, the 10-year Treasury note yield (TNX:CGI—purple line) closely followed the path of crude oil. That changed last week as crude oil rose and the yield fell to one-month lows. Now there's talk that it's shadowing the PHLX Semiconductor Index (SOX—candlesticks), which fell sharply last week. That may be true, but if so it's a new pattern. Earlier this year, when SOX made its high above 14,000, the 10-year yield was down from its previous 2026 highs.
The week ahead
October 27: September durable goods, October Consumer Confidence, September new home sales, and expected earnings from Coca-Cola (KO), Novartis (NVS), Boeing (BA), Corning (GLW), Freeport-McMoRan (FCX), HCA Healthcare (HCA), Johnson Controls (JCI), American Tower (AMT), United Parcel Service (UPS), Visa (V), Seagate (STX), Waste Management (WM), NXP Semiconductors (NXPI), Baker Hughes (BKR), and Teradyne (TER).
October 28: FOMC rate decision and expected earnings from Microsoft (MSFT), Alphabet (GOOGL), T-Mobile (TMUS), ServiceNow (NOW), GE Vernova (GEV), Amphenol (APH), UBS (UBS), Phillips 66 (PSX), and Vertiv (VRT).
October 29: Third quarter GDP, September PCE prices, September core PCE prices, ECB rate decision, and expected earnings from Amazon (AMZN), Eli Lilly (LLY), Intel (INTC), Sandisk (SNDK), Gilead Sciences (GILD), Mastercard (MA), Merck (MRK), Caterpillar (CAT), Shell (SHEL), Anheuser-Busch Inbev (BUD), Bristol-Myers Squibb (BMY), Altria (MO), Stryker (SYK), Starbucks (SBUX), and Mondelez (MDLZ).
October 30: BOJ rate decision, and expected earnings from ExxonMobil (XOM), AbbVie (ABBV), Chevron (CVX), BP (BP), Sanofi (SNY), and General Dynamics (GD).
November 2: September construction spending, October ISM Manufacturing PMI®, and expected earnings from Apple (AAPL), Palantir (PLTR), Marriott International (MAR), Entergy (ETR), Idexx Labs (IDXX), Estee Lauder (EL), Vertex Pharmaceuticals (VRTX), Diamondback Energy (FANG), On Semiconductor (ON), and Roku (ROKU).
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