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The S&P 500 has entered a crucial week with investors weighing multiple market-moving events. From the Federal Reserve’s key policy meeting to mega-cap tech earnings and high-stakes U.S.-China trade talks, the market is hitting fresh records and potentially bracing for another leg higher.
Investors are focused on the Federal Reserve’s two-day policy meeting, with a 25 basis-point rate cut widely expected when the decision is announced on Wednesday. Markets are pricing in a 96% chance of the cut following September’s softer than expected inflation print of just 3%.
While the market is expecting another 25 basis-point cut in December and two more in 2026, investors will be seeking for signs of confirmation from the Fed. Additionally, comments from Jerome Powell on interest rates, liquidity, and the Fed’s balance-sheet unwind will be critical. A dovish tone could give the S&P 500 a boost, while uncertainty around quantitative tightening may trigger short-term volatility.
The ongoing U.S. government shutdown, now entering its fourth week, presents economic headwinds. Estimates of lost output range from $15 billion to $30 billion per week, with the risk of recession increasing if the shutdown extends into Christmas.
For now, low unemployment and resilient consumer spending suggest the economy can absorb the shock.
Global trade optimism is lifting equities, with U.S. President Donald Trump set to meet Chinese President Xi Jinping in South Korea this week. Negotiators have made progress on tariffs, rare-earths, export controls, and shipping fees.
Markets have treated this as a risk-on catalyst with the S&P 500 rallying to fresh record highs. Still, the underlying disputes on subsidies, technology, and national security remain unresolved, suggesting any deal could be partial and temporary.
This week is the busiest stretch of third-quarter earnings season, with companies representing nearly $27 trillion in market value reporting results. The centre of attention would be Microsoft, Alphabet, Meta, Apple and Amazon.
These five tech giants make up roughly a quarter of the S&P 500’s market capitalization and their results would impact the market direction for the rest of the year. AI-related capital spending remains the central focus. Microsoft, Alphabet, Amazon, and Meta are projected to spend about 360 billion dollars this year, rising toward 420 billion next year. Investors would seek evidence that these heavy outlays are generating measurable revenue growth and margin expansion.
So far, results have been strong. About a quarter of S&P 500 companies have reported, and roughly 85% have beaten estimates, the highest rate in four years. Profit growth for the largest technology firms is expected to slow to 14% this quarter from 27% in the second, still nearly double the broader index pace of 8%.
Trading volumes continue to climb, with October on track to be the highest-volume month ever recorded. Retail traders remain active, while institutional investors have trimmed exposure to large-cap tech, reducing sector weighting to 30%. This marks the biggest relative underweight in five years and highlights growing caution around valuations after a long AI-driven rally.
Source: TradingView
The S&P 500 is trading at a record high of 6,875, supported by expectations of monetary easing, robust tech earnings, and positive trade developments. Momentum favours the bulls, with investors ignoring the government shutdown, stretched valuations, and geopolitical risks for now.
If the Fed delivers a dovish signal and tech earnings meet expectations, the index could extend its year-end rally to 7,000. However, any negative surprises on trade or the economy could trigger a sharp pullback.
With the Fed decision, tech earnings, and the Trump-Xi meeting all occurring in the same week, short-term volatility is likely, but buying support may step in if results and rhetoric align.
Professional investors looking for magnified exposure to the S&P 500 index may consider Leverage Shares +5x Long S&P 500 or -5x Short S&P 500 ETPs.
Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at
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