The Week Ahead
Week ahead: Fed decision, consumer confidence, and Visa results
The chair's press conference may shape mortgage quotes more than the decision itself.
In the week ended Friday: S&P 500 −0.47%, Nasdaq-100 −0.79%, Dow +0.41%
The big question
This week
Will the Fed change interest rates on Wednesday?
The Federal Reserve announces its interest-rate decision on Wednesday, Oct. 28, at 2:00 p.m. ET. The chair then holds a press conference at 2:30 p.m. The decision sets the federal funds rate, the rate banks charge each other for overnight loans. Its target range runs from 3.75% to 4.00%. That rate shapes what savings accounts pay and what credit cards cost. The 10-year Treasury yield fell 9 basis points last week to 5.00%. The average 30-year mortgage rate stands at 7.32%.
A decision to hold the range steady could leave savings yields near current levels. The 3-month Treasury bill, a guide for cash account rates, yields 4.22%. A cut could lower what savings accounts and money-market funds pay over time. It could also ease costs on credit cards and home-equity lines, which often track the Fed's rate. An increase could push those costs the other way. Mortgage rates follow longer-term yields more closely, so they may not move in step. The chair's comments on future meetings could move bond yields and stock prices as much as the decision itself.
For readers
What it means for you: Home buyers may find Wednesday's decision moves their loan quotes less than the headline suggests. Rates on 30-year fixed loans tend to track the 10-year Treasury yield, now 5.00%, more than the Fed's overnight rate. A lasting shift in that yield, perhaps after the chair's 2:30 p.m. ET remarks on future meetings, could change new mortgage quotes.
Your money this week
Rates that reach you
30-year fixed mortgage rate
Freddie Mac, Oct. 22
7.32%
−8 bp on the week
Mortgage rates set the monthly cost of a new home loan or a refinance. This week's Fed decision and inflation data could nudge them in either direction.
10-year Treasury yield
Friday's close
5.00%
−9 bp on the week
The 10-year yield helps set rates on mortgages and other long-term loans. It may react to this week's Fed decision, growth figures and inflation data.
Regular gasoline, U.S. average
EIA, week of Oct. 19
$4.28
−1.09% on the week
Pump prices take a direct bite out of household budgets. Weekend reports on possible U.S. strikes on Iran could put oil and gasoline prices back in focus.
Fed funds target range
Federal Reserve, as of Oct. 22
3.75%–4.00%
The Fed's target range shapes rates on savings accounts, credit cards and adjustable loans. The Fed announces its next decision this week, and any change could reach those rates.
The week ahead
Week of Oct. 26
No major scheduled releases.
All day Fed rate-setting meeting begins. The Fed's rate-setting committee opens its meeting, which ends later in the week with a decision that shapes rates on loans and savings.
10:00 a.m. Conference Board Consumer Confidence Index, October. The Conference Board's monthly survey shows how households feel about jobs and business conditions, and shifts in mood could hint at future spending.
After close Earnings: Visa. Visa reports quarterly results after the close, and its update may offer a read on how much consumers are spending with their cards.
TBD Advance Report on Durable Goods--Manufacturers' Shipments, Inventories, and Orders, September. The Census Bureau's report on orders for long-lasting goods such as machinery offers a gauge of how much businesses are investing.
TBD New Residential Sales, September. The Census Bureau reports September sales of newly built homes, a read on how home buyers are responding to current mortgage costs.
2:00 p.m. Fed interest-rate decision. The Fed announces its interest-rate decision, which could affect borrowing costs for mortgages, credit cards and business loans across the economy.
2:30 p.m. FOMC press conference. The Fed chair explains the decision and takes questions, and any comments about future rate moves could sway stock and bond prices.
After close Earnings: Microsoft and Alphabet. Microsoft and Alphabet report after the close, and because both rank among the largest U.S.-listed companies, their results could move major indexes.
Before open Earnings: Mastercard. Mastercard reports before the open, giving another look at consumer card spending to set alongside rival Visa's results.
8:30 a.m. GDP, third quarter (advance estimate). The Bureau of Economic Analysis releases its initial estimate of how fast the U.S. economy grew last quarter, a broad gauge of economic health.
8:30 a.m. Personal Income and Outlays, September. The September report covers household income and spending and includes the PCE price index, an inflation gauge the Fed watches.
After close Earnings: Amazon and Intel. Amazon and Intel report after the close, and their results may offer reads on online shopping, cloud computing and the chip industry.
TBD Earnings: Eli Lilly. Eli Lilly reports quarterly results at a time not yet confirmed, and as a large drugmaker its update could move health-care shares.
8:30 a.m. Employment Cost Index, third quarter. The Employment Cost Index tracks wages and benefits over the quarter, and the Fed watches it for signs of inflation pressure from labor costs.
If you own
What to watch
Index funds could feel this week's earnings reports from Microsoft and Alphabet on Wednesday and Amazon on Thursday, companies valued at $3.9 trillion, $1.9 trillion and $2.7 trillion respectively. Because broad funds weight holdings by size, results from such large companies may move a fund's value more than reports from smaller ones.
Bond funds could react to the Fed's rate-setting meeting, which begins Tuesday, after the 10-year Treasury yield fell 9 basis points this past week to 5.00%. Because bond prices move opposite to yields, a shift in rate expectations from the meeting or Tuesday's consumer confidence and durable goods data could change fund values.
Gold funds could respond to Wednesday's Fed rate decision and Thursday's early estimate of third-quarter growth, after a widely held gold fund tumbled 4.0% this past week. Gold tends to track real interest rates, meaning rates after inflation, and the dollar, so a shift in either may move these funds.
Sector funds could see uneven moves this week, as technology and consumer funds may react to results from Microsoft, Alphabet and Amazon. Health care funds might respond to Eli Lilly's results Thursday, and energy funds to ExxonMobil's report before Friday's opening bell.
Earnings to watch
Largest reporters
Wed · After close Microsoft MSFT · $3.9 trillion market value. Investors are looking for the software maker's latest quarterly results and any comments from management on demand and spending plans for the months ahead.
Thu · After close Amazon AMZN · $2.7 trillion market value. Investors are looking for Amazon's quarterly results across its online store and cloud business, along with any outlook management offers for the months ahead.
Wed · After close Alphabet GOOGL · $1.9 trillion market value. Investors are looking for Alphabet's quarterly results, including its search advertising and cloud units, and any comments from management on spending plans.
Thu · TBD Eli Lilly LLY · $1.2 trillion market value. Investors are looking for the drugmaker's quarterly results and any update on sales trends; the company has not confirmed the timing of its report.
Fri · Before open ExxonMobil XOM · $750 billion market value. Investors are looking for ExxonMobil's quarterly results before the open and any comments from management on oil and gas output and prices.
Weekend watch
While markets were closed
Bitcoin −1.16% since Friday, 4 p.m. ET, at $80,300.
The Pentagon is weighing possible strikes on Iran, according to weekend reports, while gasoline prices stay high. Any sign of escalation could lift oil prices and weigh on stocks when trading resumes Monday.
President Trump said Audi will build an SUV plant in Georgia, according to reports, as tariffs push automakers to make more vehicles in the U.S. The news could draw attention to automaker shares on Monday.
Stock index futures resume trading at 6 p.m. ET tonight.
AI corner
Three changes that matter
Topics: Markets, Energy
Riot Platforms and MARA shares fall as AI cloud credit worries grow
Bitcoin miners that now rent computing power for AI, known as neoclouds, face rising credit risks, reports say, which could test how data centers get financed.
Topics: Markets, Jobs
Columbia Threadneedle's Paul Wick sees dot-com parallels in AI boom but no bust setup
Wick said heavy AI data-center spending and higher interest rates echo the early 2000s, but he sees no setup for a sudden downturn or jobs shock.
Topics: Deals, Energy
Valor Energy sells shares privately to fund AI data-center plans
The small energy company said a private placement, a sale of shares directly to selected investors, will fund AI data-center development and working capital.
How it works
The Federal Reserve
A committee vote sets borrowing costs. The Federal Open Market Committee is the group inside the Federal Reserve that votes on short-term interest rates. Its members meet on a set schedule through the year. Each decision can filter out to the rates on savings accounts, credit cards and some loans. The process follows a fixed routine. Committee members gather in Washington and review data on jobs, prices and growth. They debate, then vote to raise, lower or hold the Fed's target rate. A written statement goes out at a set time on the final day. The chair then holds a press conference to explain the vote and take questions. Banks often adjust their own rates soon after a change. Detailed minutes of the discussion come out some weeks later. This week's meeting opens on Tuesday, Oct. 27. The decision is scheduled for 2:00 p.m. ET on Wednesday, Oct. 28, with the chair's press conference at 2:30 p.m. Markets often react to the wording of the statement and the chair's answers as much as to the vote itself. A hint about the next meeting could move bond yields and stock prices that afternoon. Microsoft and Alphabet also report results after the close that day. The committee's choices tend to matter again whenever new inflation or jobs data shift views on the Fed's next step. Thursday's report on household income and spending includes a price gauge the Fed follows closely.
The close
The big picture. This is a Fed week and a heavy earnings week at once. The S&P 500 fell 0.5% last week, and the 10-year Treasury yield finished the week at 5.00%. The Fed's rate decision on Wednesday could set the tone for bonds, savings rates and loan costs. Results from Microsoft, Alphabet and Amazon may matter almost as much for index funds, because very large companies carry heavy weight in them. Both forces may pull on a broad fund, though neither alone decides its long-run course.
On the calendar. The week's growth figures and the chair's remarks could shape expectations for the Fed's next meetings. Those expectations may guide what cash accounts pay, and what new mortgage and credit card borrowers are quoted, in the weeks that follow.
See you Monday.
Not investment advice.