Tech Titans Face AI Spending Scrutiny Amid Rate Hike Fears
Big tech earnings will be the focus of this week's market news. Microsoft and Meta are set to report their quarterly results on Wednesday, followed by Amazon and Apple on Thursday. These four companies combined make up around 17% of the S&P 500 index, with a total value of $11 trillion.
Investors will be watching closely to see whether these tech giants' massive spending on AI infrastructure is paying off. Microsoft's shares have fallen 21% so far this year, in part due to its Copilot AI work sidekick failing to meet growth expectations. Meta and Amazon have also invested heavily in their respective AI build-outs.
Meanwhile, the Federal Reserve meeting later this week could lead to a rate hike, which would impact interest rates for savings and borrowing. The core inflation rate in the US dropped to 2.6% in June, but is still above the Fed's target of 2%. Markets are pricing in a 31% chance of a rate hike at the coming meeting, but a 100% certainty by September.