This week is notable for the equity market because of concentrated tech earnings, evolving trade developments and a Federal Reserve interest rate decision.

Following several weeks without economic releases due to the government shutdown, September's Consumer Price Index showed inflation at 3.0%, below the 3.1% estimate. The better-than-expected reading coincided with a gap higher to close out the week and was interpreted by market participants as increasing the odds of a near-term rate cut.

President Trump asserted that Canada ran a misleading advertisement using Ronald Reagan's voice, suspended all trade negotiations with Canada and imposed an additional 10% tariff over the weekend. Canada is the United States' largest trading partner when combining goods and services, surpassing Mexico and China.

Several major technology companies will report results this week:

• Microsoft
• Google
• Meta
• Apple
• Amazon

Those five companies together account for approximately 23% of the S&P 500 by weight.

Traders and investors are anticipating two more interest rate cuts before year end as the Federal Reserve continues its rate cut cycle. The Fed resumed cutting rates after citing weakness in the U.S. labor market and following a cooldown in inflation from 2022 highs. During the period when inflation peaked, the Fed raised rates to rein in prices, which in turn slowed housing, credit and the labor market; the subsequent rate reductions aim to stimulate economic activity.

Two principal factors that influence markets over the long term are corporate earnings and interest rates. Corporate earnings are currently near record levels. Separately, declining interest rates are part of the prevailing monetary backdrop. There is also notable excitement around artificial intelligence and new U.S. investments, which has contributed to optimistic market sentiment.

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