Fed blackout earnings week begins after Nasdaq's worst week since June

The Fed blackout earnings week opens with Wall Street on edge. The Nasdaq Composite dropped 4.5% last week, its worst weekly showing since June, as investors soured on the AI trade. The S&P 500 fell 2% for the week, while the Dow Jones Industrial Average gained 0.7%, extending a run that has left blue-chip stocks looking sturdier than the tech names that led the market this year. With roughly 70 S&P 500 companies due to report results in the coming days, the question hanging over trading desks is whether earnings can rescue the narrative.

Friday set the tone. The Nasdaq slid 2.1% and the S&P 500 lost 1.2%, while the Dow slipped 0.3%, according to Investopedia's market coverage. Bonds swung sharply too: the 10-year Treasury yield topped 5.09% in late-afternoon trading after spiking to 5.33% on Wednesday's hotter-than-expected inflation data, then easing as investors rotated out of stocks and into safer assets.

The selloff centered on the companies that powered this year's rally, and it set a grim tone for the Fed blackout earnings week. CoreWeave fell 12% on Friday, its second heavy loss in three days, as worries about its debt load spread. The iShares Semiconductor ETF dropped 11.8% for the week. Behind the red ink, a mix of concerns weighed on the sector, from competition in international chipmaking to doubts about whether AI infrastructure spending can generate the returns to justify it, Investopedia reported.

Federal Reserve Chair Kevin Warsh did little to calm the market, and his remarks landed just as the Fed blackout earnings week got underway. Speaking at an International Monetary Fund meeting in Bangkok, he declined to say whether the central bank will hold or raise rates at its policy meetings later this month or in early December. "It's a new chapter at the Fed, and we're not in that business anymore," he said, according to Investopedia. Traders now see a 17% chance of a rate hike at the late-October meeting, down from 28% the day before, and an 89% chance of a hike in December, per CME FedWatch data cited in the coverage. September's consumer price index rose 0.6% for the month and 3.7% from a year earlier, keeping inflation squarely in the policy debate.

Earnings season hits full stride

Attention now turns to corporate results, and Wednesday is the busiest day of the Fed blackout earnings week. Six technology companies worth more than $200 billion each report after the closing bell, Meta, Tesla, IBM, Texas Instruments, Lam Research and SAP, per Opening Bell Daily. Netflix goes first on Tuesday afternoon. Tesla has already told investors it delivered 486,532 vehicles in the third quarter, ahead of expectations, while Meta enters the week after sliding nearly 4% on Friday and Nvidia fell 1.5%. For the AI trade, the results will test whether the biggest spenders can show that their data-center budgets are turning into revenue.

Airlines and consumer giants round out the docket. General Motors reports Tuesday morning, and American Airlines, Procter & Gamble and Comcast follow later in the week. Western Digital, a key maker of data-storage hardware, reports after the close on Thursday. The spread of reports means investors will get fresh reads on travel demand, household spending and chip demand within a few sessions of the Fed blackout earnings week.

A quiet Fed, a loud calendar

One thing investors will not get during the Fed blackout earnings week is guidance from the central bank. The Fed's quiet period began over the weekend ahead of the October 27-28 policy meeting and covers every trading day, so no official will comment publicly on monetary policy or the economic outlook, per Investopedia's week-ahead outlook. That leaves markets to parse earnings and data on their own. Fresh readings on weekly jobless claims land Thursday, while S&P Global's flash purchasing managers indexes and the University of Michigan's final consumer sentiment survey arrive Friday.

For younger investors, the Fed blackout earnings week is a live lesson in how fast sentiment can turn. Index funds that lean on a handful of mega-cap tech names can sink with them, and a stretch that started with hopes for lower rates can end with traders pricing in a December hike. The numbers to watch are results, not predictions: whether Meta and Tesla can show real cash behind the AI spending, and whether Friday's data keeps inflation from forcing the Fed's hand.