US Stocks Face Fed Decision, Tech Earnings Deluge Amid Inflation Fears

The US stock market is bracing for a potentially volatile week ahead of several key events. The Federal Reserve meeting, set to take place on Wednesday, will provide crucial insight into the path of interest rates, which have been a major driver of market sentiment this year.

Major equity indexes have posted weekly declines, with Alphabet and Tesla leading the way after their quarterly reports. Alphabet's massive AI spending plans sparked concerns about whether other tech giants, including Microsoft, Amazon, and Meta Platforms, will be able to recoup their investments.

The Fed meeting comes at a time when oil prices are surging due to escalating tensions in the Middle East. Brent crude hit $100 a barrel on Thursday, fueling fears that policymakers may need to raise interest rates more aggressively to combat inflation.

Fed funds futures currently price in a 38% chance of a quarter-point rate increase, while BNP Paribas economists warn that a shock rate hike cannot be ruled out entirely. Even if the Fed holds rates steady, investors will be looking for hints about future rate hikes in the policy statement and Chair Kevin Warsh's press conference.

The second-quarter earnings season is also set to heat up next week, with over one-third of S&P 500 companies expected to report results. The tech sector, which has been a key driver of market gains this year, will be under particular scrutiny as investors assess the impact of AI spending on corporate profits.