US Midterm elections, Apple earnings, jobs data to test Wall Street after AI rout

US stock market investors face a crucial week ahead, with the US midterm elections, a packed corporate earnings calendar and the monthly jobs report likely to shape sentiment after a series of setbacks for artificial intelligence-related stocks, according to a report by Reuters.

Concerns over the sustainability of the AI investment boom intensified last week following disappointing quarterly results from Alphabet and Amazon, two major cloud computing companies committing billions of dollars to data centre infrastructure. Semiconductor maker Intel's shares plunged nearly 29% on Friday after its earnings report, adding to the pressure on technology stocks.

The selloff dragged the S&P 500 down 1.8% on Friday, while the Nasdaq Composite dropped 2.9%. The losses underscored growing investor concerns over the enormous financing requirements and uncertain returns associated with AI investments, which have been a key driver of the US stock market rally, as per the report.


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The pressure on technology shares could continue next week, with Apple, Advanced Micro Devices (AMD) and Palantir Technologies among the major companies scheduled to announce quarterly results. Investors will also assess whether the US midterm elections could change the regulatory environment for the AI industry.

According to a Reuters report, market strategists believe concerns about AI spending and companies' ability to generate adequate returns are likely to remain central to investor sentiment after the latest earnings announcements.

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Midterm elections could shape AI regulatory outlook
The US midterm elections on Tuesday will determine whether Democrats can wrest control of Congress from President Donald Trump's Republican Party. Democrats are widely expected to gain control of the House of Representatives, although the outcome of the Senate race remains less certain.

Investors are particularly concerned about the possibility of greater political and regulatory scrutiny of the rapidly expanding data centre industry. Rising electricity costs and environmental concerns have fuelled public opposition to new data centre projects, potentially creating obstacles for companies planning large-scale AI infrastructure investments, according to the report by Reuters.

While a change in congressional control may not immediately derail AI investments, a Democratic victory could bring increased scrutiny of the sector. Investors are also monitoring state and local elections, particularly in Texas, for potential implications for data centre development.

A Democratic sweep could weigh on sentiment towards major AI companies and technology stocks more broadly, according to market participants cited by Reuters.

The election could also have implications for defence, healthcare, financial services and cryptocurrency companies. Changes in political control could influence government spending priorities and the regulatory environment for several industries, including Wall Street banks and digital asset businesses.

Apple, AMD and Palantir earnings in focus
Corporate earnings will provide another important test for the market. Strong profit growth has supported equity valuations in 2026, with earnings across the S&P 500 expected to increase 31.6% in the third quarter, based on LSEG IBES data as of Friday, according to Reuters. More than half of the index's companies have reported results so far.

However, investors have become increasingly unforgiving of companies that fail to meet elevated expectations. Caterpillar shares, for instance, fell 9% on Thursday after the company maintained its annual sales growth forecast despite strong demand for power equipment from data centres.

Apple will report its quarterly results on Monday. Its shares have gained around 27% so far this year, making the company's outlook particularly important for technology sector sentiment.

Chipmakers AMD and Qualcomm, along with AI software company Palantir, are also scheduled to announce results. Their commentary could offer further clues about demand for AI infrastructure, semiconductor spending and the commercial potential of AI applications.

More than 100 S&P 500 companies are due to report earnings next week. These include McDonald's, Amgen and ConocoPhillips, giving investors a broader view of corporate performance across consumer, healthcare and energy sectors, the report stated.

With market expectations already elevated, companies may face significant pressure to demonstrate that earnings growth can justify their valuations.

October jobs report to offer clues on US economy
Investors will also closely monitor the US employment report for October, scheduled for release next Friday, for fresh indications about the health of the world's largest economy.

Recent economic data have painted a relatively resilient picture. Figures released on Thursday showed that the US economy expanded at its fastest pace in a year during the third quarter, supported by strong consumer spending and increased business investment in AI.

The Federal Reserve also upgraded its assessment of economic conditions this week while keeping interest rates unchanged.

However, employment growth remains a key missing element in the otherwise resilient economic outlook. Investors will look for signs of whether businesses are increasing hiring in line with economic activity or becoming more cautious about workforce expansion.

The jobs report could therefore influence expectations around the Federal Reserve's future policy decisions, particularly as investors assess the balance between economic growth, inflation and labour market conditions.

Market gains broaden beyond technology stocks
Despite the recent weakness in AI and technology shares, other sectors have helped support the broader market.

Energy and financial stocks recorded solid gains in October, while defensive sectors such as utilities and healthcare also performed well. The S&P 500 remained more than 10% higher for the year, indicating that market gains have not been entirely dependent on the technology sector.

This broader participation could offer some cushion if AI-related stocks remain under pressure. However, political uncertainty, elevated earnings expectations and questions over AI investment returns are likely to keep volatility high in the near term.

According to Reuters, strategists believe this week's developments across corporate earnings, employment data and the midterm elections will be critical in determining whether the market can regain momentum after its latest bout of technology-led selling.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)