S&P 500 Dips as Investors Focus on Fed's Next Moves

The S&P 500 (Index: SPX) closed out the trading week ending on Friday, 23 October 2026 a little under a half percent from its previous week’s close. The index went into the weekend at 7,623.68, which is 2.5% below its record high close of 7,818.93 back on 6 October 2026.

What the Federal Reserve will be doing with interest rates continued to dominate investor attention during the week that was. With Fed officials silent in blackout mode in the week ahead of their scheduled meeting on 27-28 October 2026 to determine their next actions, investors had little information to go on.

It showed in how little expectations changed for how the Fed will set the Federal Funds Rate in the weeks ahead. The CME Group’s FedWatch Tool continues to project the Fed skip taking any action during this week’s meeting and will next act to hike the Federal Funds Rate by a quarter point at the end of its next meeting on 9 December (2026-Q4). That hike would be followed by another quarter point rate hike that will be announced when the Fed’s rate-setting Open Market Committee meets on 17 March (2027-Q1).

After that, the FedWatch Tool anticipates one more rate hike in 2027, coming when the Fed meets on 15 September (2027-Q3). That’s 18 weeks later than what it projected a week earlier, but in reality, it wouldn’t take much to move it earlier on the calendar, say to June (2027-Q2).

The latest update of the alternative futures chart shows stock prices dropped to the lower end of the range associated with investors focusing on the current quarter of 2026-Q4 as they set current day stock prices.

That downward adjustment mostly took place in the latter part of the week. It came about as investors became increasingly concerned over how much tech companies are spending to realize their plans for building and implementing AI systems and also because also because oil prices increased because of ongoing geopolitical events in the Middle East. While neither of these are new concerns, in the absence of direction on the future for interest rates from the Fed, they represented the bulk of new information investors had to absorb during the week that was.

Here are the week’s market-moving headlines.

Monday, 19 October 2026

• Signs and portents for the U.S. economy:

• Oil slips from five-month high with Hormuz transits in focus
• Global food inflation is expected to intensify as supply shocks pile up

Fed minions upset AI boom is keeping U.S. economy growing:

• Fed sees AI boom adding to inflation headache, but others may pay for the medicine

Bigger domestic trouble, export growth developing in China:

• China’s economic growth picks up as exports boom, consumers balk
• China set to leave benchmark lending rates unchanged for 17th month

BOJ minions admit Japan’s inflation is almost where they want it, are expected to use it to justify more rate hikes:

• BOJ chief says underlying inflation ‘quite close’ to price goal
• BOJ may need to tighten faster if inflation beats forecast, IMF says

S&P 500, Nasdaq advance ahead of mega-cap companies’ earnings

• Nasdaq climbs as chip and AI-linked stocks bounce back

Tuesday, 20 October 2026

• Signs and portents for the U.S. economy:

• Housing is flashing warning signs just as the Fed weighs more interest rate hikes

• September data shows housing market in a deep freeze
• US single-family housing starts plunge; building permits hit 3-1/2-year low

China’s September US soybean imports rebound from zero a year earlier, data shows

Brent hits five-month high as attacks on ships, Saudi sites fuel supply worries

AI data center projects boost US warehouse demand and rents, real estate company JLL says

Economists expect Fed minions to sit on their hands in October 2026:

• Fed to skip October but raise rates again in December, nearly all economists say

Smaller stimulus, bigger trouble developing in China:

• China’s push to bolster social insurance schemes draws online backlash
• China leaves loan rates steady for 17th consecutive month
• China’s off-kilter tech economy is by design

BOJ minions see more rate hikes ahead as they boost inflation forecast and wage-price inflation spiral gets going:

• Bank of Japan may raise inflation forecast, stand pat on rates, sources say
• Japan shifting to wage-driven inflation phase, finance minister says
• Bank of Japan’s Himino signals readiness to raise borrowing costs

Growth signs developing in Eurozone:

• Europe’s earnings boom widens beyond energy and AI

Dow outperforms as Wall Street rises, healthcare stocks lead gains

• Trading Day: Oil reversal lifts spirits

Wednesday, 21 October 2026

• Signs and portents for the U.S. economy:

• Oil prices steady as investors weigh geopolitics, lower US stockpiles

• US aims to loan about a third of heating oil reserve in bid to tame prices

Trump says companies should pay ‘dividend’ to communities to make data centers popular

Bigger trouble, higher interest rates developing in Japan:

• Japan exports rise 16.7% in September as AI chip demand powers trade

• Japan exports post huge miss in September as growth slows to 16.7%

BOJ to raise rates to 1.50% in December, sticking to quarterly pace: Reuters poll

Strange economic metaphor developing in Eurozone:

• Nvidia’s Huang hails Europe’s AI potential, flanked by robot ducks
• ECB says AI, greener economy help euro zone weather energy shock

Bigger trouble still developing in Eurozone:

• Euro zone bond yields rise as French borrowing costs hit 24-year high

• French 10-year bond yields hit 5%, highest since 2002

Bond selloff revives debate about euro zone banks’ ‘doom loop’

Nasdaq leads Wall Street gains as SpaceX, Super Micro boost AI sentiment

• Wall Street closes higher; SpaceX, Tesla push markets up

Thursday, 22 October 2026

• Signs and portents for the U.S. economy:

• US banks detect unauthorized AI agents in customer accounts, Axios reports

• Millions of hacking attempts as companies and governments race to patch PHP flaws
• Why governments pulled websites offline over the decades-old PHP programming language

Companies cutting jobs as investments shift toward AI

Oil rises as US orders diplomats to leave Saudi Arabia amid escalating tensions

• From groceries to home loans, high oil prices permeate daily life

US weekly jobless claims near 57-year lows, underscore labor market stability

Former Fed minion says US economy isn’t running too hot:

• The economy is not overheating, says former Dallas Fed President Robert Kaplan

Bigger real estate losses developing in China:

• China Evergrande liquidators recover 1% of debt claims after 2-1/2 years

BOJ minions worrying less about propping up Japan’s currency, see other reasons to keep hiking Japan’s interest rates:

• Yen set for biggest rally in a month as investors seek safe havens
• Strength in Japanese loan demand expected to leave scope for more BOJ hikes

Bigger trouble developing in Eurozone, ECB minions want to do away with national economies within Eurozone:

• French debt risk premium reaches euro zone sovereign crisis levels
• ECB’s Santos Pereira pushes for deeper EU integration

Nasdaq, S&P decline as AI spending worries weaken investor sentiment, U.S. stocks suffer

• S&P 500, Nasdaq end sharply lower as revived AI doubts ignite tech selloff

• Meta shares slide, default insurance hits record as AI spending alarms investors

Gold falls to 11-week low; silver slumps to lowest close this year

Friday, 23 October 2026

• Signs and portents for the U.S. economy:

• US business activity cools in October; strong demand fueling price pressures
• Oil prices jump $3 on Houthi attacks, oil spill, highest settlement since April
• Trump says Canada ‘working very hard’ to make a deal with US

• Trump removes 50% tariffs on Canadian products to try to boost to Maine companies
• Canadian jet maker Bombardier says it plans new $270 million US investment

Bigger trouble, stimulus developing in China:

• China urges government agencies to mitigate AI job displacement
• China calls on oil, gas firms to boost output, build strategic supply bases

BOJ minions getting excited to hike interest rates again as bigger trouble develops in Japan:

• Japan’s core inflation exceeds BOJ target, cements near-term rate hike chance
• Japan manufacturing growth slows to 7-month low in October, PMI shows

Bigger trouble developing in Eurozone:

• Euro zone growth slows to 4-month low amid rising costs and French strife, survey shows

• French bond pain puts euro zone’s weak links on notice

EU vows to fix ‘China Shock 2.0′ via talks with Beijing

S&P 500 ends lower for week as AI spending concerns and rising oil prices weigh

• Wall Street closes lower to end rocky week
• Gold settles below $4,000 after steepest weekly loss in nearly five months

The Atlanta Fed’s GDPNow tool‘s projection of real GDP growth for the U.S. economy in 2026-Q3 dipped 0.1% to 3.1% this week. After the BEA releases its initial estimate of GDP for 2026-Q3 on 29 October 2026, the GDPNow tool will shift toward projecting 2026-Q4′s real GDP growth rate.

Image credit: Microsoft Copilot Designer. Prompt: “An editorial cartoon of a Wall Street bull dressed as a batter for the Milwaukee Brewers and a bear dressed as a catcher for the Tampa Bay Rays who are angry with a Federal Reserve official dressed like an umpire who is being vague about where the Fed’s strike zone is for determining how to set interest rates.”