AI earnings, Fed decision, and midterms set up pivotal two weeks for stocks

Stocks are entering a crucial two-week period marked by major AI company earnings, a Federal Reserve interest rate decision, and the US midterm elections, all of which could significantly impact market direction. The S&P 500 has remained relatively flat recently, but concerns about AI spending and rising borrowing costs have caused volatility in tech stocks. This week, Alphabet, Microsoft, and Amazon will report earnings, with Apple and AMD following next week, as investors seek clarity on AI investment returns. The Fed is widely expected to keep rates unchanged on Wednesday, though markets anticipate a possible hike in December, with inflation currently at 3.7%. The outcome of the midterm elections next week is also on investors' radars. Historically, markets have tended to rise after midterms once uncertainty clears, with the S&P 500 averaging a 14.9% gain in the following year under Republican presidents. However, analysts note that a potential Democrat majority in the House is already priced in, leaving questions about Senate control and the president's veto power as key variables.