Markets sent mixed signals last week as investors weighed a resilient economy against rising oil prices and fresh doubts about the cost of the artificial intelligence boom. With the Federal Reserve meeting and Big Tech reporting this week, the question is whether growth can outrun inflation.

 

 

Here’s the scorecard for last week, and the stories behind it.

 

How the Major Indexes Fared

• The S&P 500 slipped 0.47%.
• The Nasdaq 100 retreated 0.79%.
• The Dow Jones Industrial Average advanced 0.41%.

 

 

Counting the Costs

AI spending faces a tougher audience. Meta beat revenue expectations, yet its shares fell about 7% Thursday. The company burned through more cash than it brought in for the first time in over a decade and proposed selling new shares to fund its AI build-out. The jitters spread, handing the Nasdaq 100 its worst day since early June. Investors aren’t abandoning AI, but they now want to know who pays for it and when it pays off.

 

Solid growth comes at a price. October business surveys showed impressive expansion, with new orders at their strongest since early 2022. Weekly jobless claims also fell to their lowest level since July. The catch is that strong demand lets companies raise prices at the fastest pace in three years. Consumers aren’t feeling the boom, though. Sentiment sits near record lows, a warning sign even if gloomy moods haven’t yet dented spending.

 

Oil adds pressure, and the Fed’s job gets harder. Renewed Middle East tensions lifted Brent crude about 6% for the week to roughly $117 a barrel, its highest close since late April. Pricier fuel is a double burden, keeping inflation elevated while straining household budgets. Fed policymakers under Chair Kevin Warsh raised rates in September, and many economists now see another hike as possible in December.

 

 

 

The Week Ahead

The Fed announces its decision Wednesday, October 28th. While rates are likely to hold steady, investors will parse the Fed’s message for hints of another hike. That same day, Microsoft and Alphabet report quarterly results, with Amazon following Thursday. After last week’s selloff, their spending plans and cash flow will test whether the AI bet is paying off.

 

Thursday also brings third-quarter GDP and the Fed’s preferred inflation gauge, the PCE price index. The ideal outcome is steady growth without prices running hot enough to force policymakers’ hand.

 

 

 

 

 

 

This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way whatsoever. This presentation may not be construed as investment, tax or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website, www.adviserinfo.sec.gov. Past performance is not a guarantee of future results.