Wall Street heads into the first week of November with three forces converging at once: a midterm election that could flip control of Congress, a delayed read on the labor market, and a wave of earnings from the companies at the center of the artificial intelligence trade.
The political calendar comes first. Tuesday’s vote will decide whether Democrats can take Congress away from President Donald Trump’s Republican Party. Democrats are widely expected to win the House of Representatives, while the Senate remains a genuine toss-up. Republicans have held both chambers through the first two years of the current administration.
For equity investors, the election matters less as a partisan scorecard than as a signal on regulation and spending. A decisive Democratic showing is expected to invite closer scrutiny of data centers, whose strain on power grids and water supplies has stirred local opposition, and of the hyperscalers funding the buildout. Wall Street banks and crypto firms could also face tougher oversight under a unified Democratic Washington. Defense and healthcare are the other sectors most sensitive to any shift in fiscal priorities.
“To the extent that the Democrats really do have a significant blue wave, I think that will be seen as negative for both the AI names, for tech to some extent in general, and maybe even for the market as a whole,” said Rick Meckler, a partner at Cherry Lane Investments.
State and local contests, particularly in Texas, are drawing attention too, given their bearing on where new data centers can be sited.
An AI trade under pressure
The election arrives at an awkward moment for the market’s biggest engine. Alphabet’s quarterly report this week crystallized fears that the spending required to sustain AI growth is outrunning the revenue it generates. The Google parent’s shares fell more than 12% on Thursday after heavy capital outlays and a soft top line, and the damage spread across the major indexes.
“The stock market seems a bit troubled to me, and I think that really stems from the AI fears that seem to be persistent, if not building,” said Marta Norton, chief investment strategist at retirement and wealth services provider Empower. “There is still some digestion around what we saw with earnings this week.”
Friday brought another leg lower. The S&P 500 dropped 140.32 points, or 1.8%, to 7,580.07, while the Dow Jones Industrial Average shed 572.25 points, or 1.1%, to 51,770.31. The Nasdaq Composite bore the brunt, sliding 747.73 points, or 2.9%, to 25,437.
Caterpillar offered a separate cautionary tale, falling 9% on Thursday after holding to its full-year sales growth forecast even as demand for its power equipment from data center operators stayed strong.
“The earnings bar is very high,” said Chris Galipeau, head market strategist at the Franklin Templeton Institute. “And if you miss or don’t jump over that bar, you’re in trouble.”
Apple, AMD and Palantir take the stage
Against that backdrop, roughly half of the S&P 500 has already reported, with third-quarter earnings on track to climb 31%, according to LSEG IBES data cited on Thursday. More than 100 index members report in the coming week, including McDonald’s, Amgen and ConocoPhillips.
The heaviest attention falls on the technology names. Apple reports Monday, with its shares up about 28% so far this year, putting its results and guidance under a brighter spotlight than usual. Advanced Micro Devices and Qualcomm will give a read on semiconductor demand, while Palantir Technologies offers a fresh gauge of enterprise appetite for AI software.
| Date | Event |
|---|---|
| Monday, Nov. 2 | October manufacturing PMI; ISM manufacturing index; Apple earnings |
| Tuesday, Nov. 3 | Midterm elections; September job openings and labor turnover survey |
| Wednesday, Nov. 4 | ADP October employment report; September trade balance; October services PMI; ISM services index |
| Thursday, Nov. 5 | Weekly jobless claims |
| Friday, Nov. 6 | October employment report |
Note: Schedule compiled from published economic calendars and company guidance.
The missing piece: hiring
The week’s economic data has so far painted a surprisingly sturdy picture. Third-quarter GDP grew at its fastest pace in a year, lifted by resilient consumer spending and a sharp step-up in business investment in AI. The Federal Reserve, which left rates unchanged this week, upgraded its description of the economy.
What has not kept pace is hiring, which is why Friday’s October payrolls report carries outsized weight. Investors will parse the figures for signs that wage growth or employment strength might push the central bank toward another rate increase, or instead confirm that the labor market is cooling enough to keep policy on hold.
“I think the missing piece of this strong economic growth narrative is the lack of job growth,” said Matthew Miskin, co-chief investment strategist at Manulife John Hancock Investments.
Rotation beneath the surface
Even with AI leaders under pressure, the broader market has held up better than the headlines suggest. Energy and financial shares were on course for solid monthly gains as October closed, as were defensive groups including utilities and healthcare. The S&P 500 was last up about 1% for the month and more than 12% for the year.
“The market is much more broad than people generally want to give it credit for,” Galipeau said.
That breadth will be tested in the days ahead. A split verdict from voters, a soft-but-not-weak payrolls number and steady results from Apple could steady the market. A Democratic sweep, a hot inflation read in the wage data or a disappointing guide from the iPhone maker would leave investors with little cover.