Stocks Extend Gains on Firm Earnings, Solid Tech
Published as of: October 27, 2026, 9:12 a.m. ET
(Tuesday market open) Major indexes built on Monday's gains to kick off one of the busiest earnings days of the year. Investors also surveyed a host of data and warily watched crude oil and yields, both of which slipped early. Initial reaction to company reports varied, with Coca-Cola (KO) falling despite an earnings beat and Boeing (BA) inching up following better-than-expected revenue. Several large consumer-related firms posted strong quarters and the chip sector flexed early muscle.
Today feels like an appetizer for Wednesday and Thursday's packed earnings and central bank schedule. The Federal Reserve begins its two-day meeting with odds of a rate hike less than 10%, according to the CME FedWatch Tool. Tomorrow afternoon brings Alphabet (GOOGL) and Microsoft (MSFT) results, and AI spending is a critical element. The conversation could key in on capital expenditures, financing needs, and free cash flow. On today's AI front, Nvidia (NVDA) announced a $3 billion investment in Meta Platforms' (META) $97.5 billion equity offering.
Monday's broad rally lifted most sectors. Chips and AI-related names took pole position, but industrials and discretionary stocks also popped. Looking ahead at data due after today's open, September new home sales are seen at a seasonally adjusted annual rate of 655,000, according to Briefing.com, down from August. Consumer confidence, historically weak in September, is expected to stay that way in October at 80.5. The report also includes a look at inflation expectations—no small item with the Fed meeting underway.
Three things to watch
- Cloud giants to update on AI spend: After last week's plunge in AI stocks and a sharp decline in Treasury yields, which might have reflected concerns about the economy if the AI surge should slow, all eyes are on Magnificent Seven firms reporting tomorrow and Thursday. Though Meta got punished last week for promising more AI spending, that topic is opaque in terms of possible market response for the firms up next. They all showed evidence last time of AI spending providing return, at least judging from accelerating cloud growth. More of the same—heavy spending and strong cloud results—might not get the same reception as Meta, which has no cloud business to speak of and faces questions on how to monetize its popular Muse agent. AI-related stocks have struggled this month amid debt and spending concerns. The so-called neoclouds—specialized, high-performance cloud computing providers—are in sharp focus after SpaceX (SPCX) CEO Elon Musk questioned Monday if they could secure needed financing. This followed Nvidia CEO Jensen Huang noting that lack of capital is hindering their growth.
- Warsh eye view awaited: The Fed raised rates last month for the first time in three years and September consumer and producer inflation data ran hot. Approaching tomorrow's decision, many Fed officials have suggested there's no urgency to raise rates. With a move unlikely and no forecasts due, focus likely turns to the press conference by Fed Chairman Kevin Warsh. Last time, he was brief compared with his predecessor Jerome Powell, ending the affair after roughly half an hour. Clear guidance from Warsh appears unlikely, but analysts hope for views on inflation, especially if he sees any improvement from the latest round of numbers. Odds of a December hike are down over the past week, to around 80% from a peak of around 90%. However, those could rise if the Fed leaves rates unchanged tomorrow and PCE delivers any unpleasant surprises. Also, analysts expect a solid initial third quarter GDP estimate of 3%, up from 2.2% in the second quarter. The labor market still looks resilient, possibly giving the Fed cover to address inflation before year-end, though the October jobs report a week from Friday offers a fresh look at employment.
- Credit check: Credit spreads, which had been relatively narrow despite market volatility, began to rise last week, a concerning sign. The average spread of the Bloomberg U.S. Corporate Bond Index closed at 0.89% Friday, a more than six-month high, while the average spread of the high-yield index closed at 3.37%, surpassing its March high. While spreads can rise without threatening the stock market, there were times when rising spreads gave an early hint of Wall Street troubles. Current spreads—while higher than earlier this year—remain below the 1.22% average for the corporate bond index over the last 15 years and 4.15% for high yield. Still, the rise drew attention, coinciding with concerns about AI-related firms possibly having less access to capital and their interest costs rising. A sudden surge in borrowing costs can make it tougher for debt-dependent companies to stay afloat. One metric on the loan and credit outlook arrives early next month with the Fed's Senior Loan Officer Opinion Survey on Bank Lending, which tracks bank lending standards and loan demand.
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On the move
- Coca-Cola (KO) was flat ahead of the open even as results topped analysts' consensus and the company raised its outlook. Case unit volume increased 5%, though international growth outpaced U.S. growth.
- Royal Caribbean (RCL) surged almost 5% as the cruise company surpassed analysts' earnings estimates and revenue climbed 9%. The strong showing could lift other travel-related stocks in a climate dominated by concerns over fuel costs.
- Boeing (BA) fell 1% ahead of the open. The company turned in a wider-than-expected quarterly loss but better-than-expected revenue, though commercial revenue fell year over year. Space, defense, and security performed well but Boeing continues to spend heavily on new airplane production, hurting profits, The Wall Street Journal noted.
- Corning (GLW) jumped 3% ahead of the open following stronger than expected earnings per share and solid optical communications sales growth. Other stocks in the optical networking business rose on Corning's coattails, including Lumentum (LITE) and Ciena (CIEN).
- CoreWeave (CRWV) and Nebius (NBIS) both rose about 3% this morning, bouncing back despite ongoing worries about their ability to access capital. The gains came after CoreWeave announced an expansion of its global AI platform.
- Broadcom (AVGO) rose 3.5% on improved sentiment around the AI market. Shares got upgraded to buy from neutral at D.A. Davidson.
- United Parcel Service (UPS) edged up almost 2% after the delivery firm beat earnings estimates and raised its forecast. The company's margins have improved thanks in part to focusing on higher-margin shipments and scaling back deliveries of packages for Amazon (AMZN), Reuters reported.
- Moderna (MRNA) fell more than 3% on a downgrade to market perform from outperform by William Blair, which cited valuation.
- Instacart (CART) rallied almost 8% Monday and DoorDash (DASH) fell 6% after The Wall Street Journal reported that DoorDash could soon acquire Instacart.
- Lockheed Martin (LMT) jumped 5% Monday after getting upgraded by Morgan Stanley to overweight from equal weight. This followed Lockheed's announcement last week that it has a framework agreement with the Department of War to maintain F-35 production at 156 per year.
More insights from Schwab
Why no rate hike is expected: September's hot inflation report would normally indicate a rate hike, but chances are slim. Key officials have hinted that the Fed might not want to hike rates at every meeting, said Kevin Gordon, head of macro research and strategy at SCFR. Hear more thoughts on the Fed meeting in Schwab's Week Ahead video.
Weekly technical update: Schwab's Technical Analysis Weekly tracks indicators, chart patterns and market trends to help traders make decisions.
LEAPS guide: Find out about LEAPS, or long-dated options used in a variety of trading strategies. Our latest options article discusses their use along with potential risks and benefits.
Chart of the day
Data source: S&P Dow Jones Indices. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
Breadth has improved over the last two weeks, and more than 53% of S&P stocks trade above their 50-day moving averages ($SPXA50R—candlesticks). That's above the 200-day moving average for the percentage of stocks trading above their 50-day moving average (green line) and up from 20% that traded above their 50-day moving average late last month. There's been a big move into health care, staples, and energy. Breadth looks good, but breadth without tech doesn't set all time index highs, and the S&P 500 Index fell the last two weeks.
The week ahead
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—first estimate, 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).
November 3: September factory orders and expected earnings from Advanced Micro Devices (AMD), Shopify (SHOP), Pfizer (PFE), Amgen (AMGN), Eaton (ETN), Marathon Petroleum (MPC), Arista Networks (ANET), Booking Holdings (BKNG), Block (XYZ), and American International Group (AIG).
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