Finance

Will the Fed and Big Tech Earnings Derail the S&P 500’s Bull Run? What Investors Must Know

S&P 500 faces a pivotal week with Fed’s rate decision & tech earnings impacting the bull market’s future.

October 29, 2025, 10:15 AM

A smartphone screen shows US stock market indices like the S&P 500 and Dow, with a blurred American flag in the background.

A financial app on a smartphone displays S&P 500, Nasdaq, and Dow Jones market data. By PJ McDonnell / Shutterstock.com.

Executive Summary

The S&P 500 faces a pivotal week influenced by the Federal Reserve’s anticipated interest-rate decision and earnings reports from five major technology companies.

The Federal Reserve is expected to announce another quarter-point rate cut, navigating conflicting economic pressures from President Trump’s trade policies, with any deviation from this path potentially causing market volatility.

Investors will closely monitor Big Tech’s commentary on artificial intelligence investments and the impact of tariffs on profits, as these factors are crucial for the S&P 500’s elevated valuation and continued market direction.

The Story So Far

The Federal Reserve is currently grappling with the dual impact of President Trump’s trade policies, which have created conflicting pressures of higher inflation and a weaker job market, leading to recent interest rate cuts and investor expectations for more. This monetary policy uncertainty, combined with the imminent earnings reports from five “Magnificent Seven” tech companies—which hold significant market weight and whose commentary on AI investments and tariff impacts is keenly watched—sets the stage for potential market volatility, especially given the S&P 500’s elevated valuation.

Why This Matters

The S&P 500’s three-year bull market faces a critical test this week, as any deviation from the Federal Reserve’s anticipated interest rate cuts could trigger significant volatility, reflecting the complex economic pressures posed by President Trump’s trade policies. Concurrently, the earnings reports from major technology companies, specifically their commentary on AI investments and the impact of tariffs on profitability, will be crucial, with the market’s current elevated valuation making it highly susceptible to a downturn if results disappoint or guidance is conservative.

Who Thinks What?

Federal Reserve policymakers are navigating conflicting economic pressures from President Trump’s trade policies, which simultaneously contribute to higher inflation and a weaker jobs market, leading them to prioritize the labor market with recent rate cuts.

Economists anticipate consumer prices to trend higher due to tariff-related cost increases and largely expect the Federal Reserve to implement further quarter-point rate cuts in October and December.

Investors and Wall Street analysts are keenly focused on upcoming big tech earnings, particularly seeking commentary on AI investments and the impact of tariffs, with concerns that conservative AI spending or profit erosion could negatively affect the S&P 500’s elevated valuation.

The S&P 500, currently in a bull market for over three years and up 17% this year as of October 12, 2025, faces a pivotal week with crucial events poised to influence its trajectory. Investors are keenly awaiting the Federal Reserve’s interest-rate decision on Wednesday, October 29, and the earnings reports from five major technology companies scheduled for Wednesday and Thursday. The market’s stability could be tested by unexpected policy signals from the Fed or disappointing commentary on artificial intelligence or tariffs from tech giants.

Federal Reserve’s Monetary Policy Decision

The Federal Reserve is set to announce its interest-rate decision on October 29 at 2 p.m. ET, following a two-day meeting. Chair Jerome Powell is expected to provide further context on the central bank’s monetary policy shortly thereafter. This decision follows a quarter-point rate cut in September, the first such reduction since December 2024.

Policymakers had maintained steady rates for nine months, observing the economic impact of President Trump’s trade policies. Tariffs have presented a complex challenge, simultaneously contributing to higher inflation, which typically warrants rate hikes, and a weaker jobs market, which suggests rate cuts. The Fed’s dual mandate to maintain stable prices and maximum employment has therefore faced conflicting economic pressures. In September, the central bank prioritized the labor market over inflation concerns, but economists anticipate consumer prices to trend higher due to tariff-related cost increases. Investors largely expect another quarter-point cut in October, followed by a similar reduction in December, and any deviation from this path could trigger market volatility.

Big Tech Earnings in Focus

This week will also see five of the “Magnificent Seven” technology companies report their latest quarterly financial results, which collectively account for 25% of the S&P 500’s weight. Alphabet, Meta Platforms, and Microsoft are scheduled to announce earnings after market close on October 29. Amazon and Apple will follow with their reports after market close on October 30.

Wall Street analysts have set consensus estimates for these companies. Alphabet is expected to report a 6% increase in revenue to $93.9 billion and a 7% rise in earnings to $2.27 per diluted share. Meta Platforms’ revenue is projected to grow by 22% to $49.4 billion, with earnings up 11% to $6.68 per diluted share. Microsoft anticipates a 15% revenue increase to $75.2 billion and an 11% earnings increase to $3.66 per diluted share. Amazon’s revenue is estimated to climb 12% to $177.8 billion, with earnings rising 10% to $1.58 per diluted share. Finally, Apple is expected to see a 7% increase in both revenue to $101.8 billion and earnings to $1.76 per diluted share.

AI and Tariffs: Key Earnings Commentary

Beyond the headline numbers, investors will be particularly attentive to commentary from these tech companies regarding their investments and performance in artificial intelligence (AI). According to JPMorgan Chase, capital spending related to AI was the most significant driver of economic growth in the first half of 2025, surpassing consumer spending. Indications of more conservative AI investments or a failure to realize benefits from past infrastructure spending could spark broader concerns about economic strength and potentially lead to a stock market downturn.

The S&P 500 is currently trading at 22.7 times forward earnings, a notable premium compared to its 10-year average of 18.6 times. This elevated valuation means any signs of profit erosion due to tariff impacts could provoke a strong negative market reaction. Conversely, robust earnings performance combined with optimistic forward guidance could reinforce the existing bull market and propel the S&P 500 to higher levels.

Market Outlook

The confluence of the Federal Reserve’s interest-rate decision and the earnings reports from influential technology companies creates a high-stakes environment for the stock market this week. The S&P 500’s ongoing bull run faces potential headwinds from monetary policy shifts and corporate performance metrics, particularly those related to AI investments and the sustained impact of trade policies. The outcomes of these events will be crucial in determining the market’s near-term direction.