Tech stocks power Wall Street gains before US Fed rate call

Brent crude dropped below $115. Treasuries wavered. Investor enthusiasm around artificial intelligence returned after the trade took a drubbing over the past few weeks amid concerns about the amount of debt fueling the infrastructure buildout. Three of the world’s biggest companies — Alphabet Inc., Microsoft Corp. and Amazon.com Inc. — are expected to show healthy growth when they report earnings this week.

But for Wall Street, what really matters these days is: How much money they’re spending on AI and when it will start to pay off in a meaningful way. “It’s going to be very interesting to see how these stocks react to their earnings/guidance,” said Matt Maley at Miller Tabak. “So far, many tech names have sold off following their reports. Therefore, given how important these companies are to the AI phenomenon, their reactions should be particularly important.”

Meanwhile, the Fed and its peers in the euro zone and Japan will probably keep interest rates steady this week, opting to bide their time before potential further hikes. Fed Chairman Kevin Warsh, who’s eschewed guidance on future moves, will face a tricky test at his post-meeting press conference Wednesday. He probably won’t offer much insight about December, but may also not want to sway market bets away from the current expectation for a hike.

On the economic front, US consumer confidence unexpectedly rose in October for the first time in four months as views about the job market and business conditions improved. Despite the increase in confidence this month, consumers remain troubled by the impact of higher prices on their budgets and on wage growth that is lagging behind inflation. Borrowing costs have also climbed more recently, making homes, vehicles and other big-ticket purchases less affordable.