While most sectors in the S&P 500 took a breather after a three-day run, the cohort of tech megacaps kept powering ahead. Microsoft climbed 2% after finalising a new pact with OpenAI that will give the software giant a 27% ownership stake worth about $135 billion. Apple briefly topped $4 trillion. Nvidia plans to make a $1 billion equity investment in Nokia.
On Wednesday and Thursday, five big techs that account for about a quarter of the US benchmark will report earnings. Investors will be looking for assurances that the flow of tens of billions of dollars for computing infrastructure will continue – and ultimately pay off down the road.
Agencies“This group has repeatedly reassured investors that the AI theme is alive and well, and given the number of deals that have been announced over the past few months, it seems likely that this narrative will continue so long as Wall Street rewards them for this approach,” said Bret Kenwell at eToro.
Aside from earnings, policymakers in Washington will take the spotlight, with a widely anticipated quarter-point reduction from the Fed on Wednesday. Trade headlines also remain in focus, with President Donald Trump’s Thursday sit-down with Chinese President Xi Jinping watched most closely.
The S&P 500 hovered near 6,880. The yield on 10-year Treasuries was little changed at 3.98%. The dollar edged lower. The Magnificent Seven is projected to deliver profit growth of 14% in the third quarter, down from 27% in the second quarter, according to data compiled by Bloomberg Intelligence. That’s nearly twice the 8% expected profit growth for the broader S&P 500, but it also would be the slowest pace since the first quarter of 2023. Big Tech firms have a history of reporting earnings that far exceed Wall Street estimates. And that’s what many investors are counting on. “We expect another strong round of mega cap tech earnings reports, given the relentless demand for AI technology and infrastructure,” said Clark Bellin at Bellwether Wealth.