Market Highlights for the Week: Elections, Fed, and Earnings

This week is set to keep investors on edge, with a closely contested U.S. presidential election and a Federal Reserve meeting that could bring another rate cut. Here’s what to watch for in the markets in the coming days.

U.S. Elections

Tuesday is Election Day, with early voting already underway in a very tight race between Republican Donald Trump and Democrat Kamala Harris. Recent increases in Treasury yields and the dollar reflect anticipation of a Trump victory in some market sectors. However, polls show a very close race, and a possible Harris win could trigger swift market moves.

Some traders are hoping for a clear outcome, fearing that a contested election and prolonged uncertainty could impact the markets. Only seven states are considered truly competitive, and a poll released Saturday showed Harris with a surprising lead in Iowa, a state Trump had won decisively in the last two elections.

Fed Meeting

The Fed is expected to cut rates by 25 basis points at its policy meeting this Thursday, with another reduction anticipated in December, following September’s 50-point cut. Friday’s nonfarm payrolls report, which showed a slowdown in job growth in October due to strikes and weather disruptions, supported expectations for a smaller rate cut.

Investors are looking to the Fed statement and Chairman Jerome Powell’s comments at the subsequent press conference for insight into whether officials believe economic resilience will continue and how that may influence the pace of future rate cuts. However, analysts at Morgan Stanley (MS) note that Powell may avoid detailing the size or frequency of future cuts, as the Fed remains data-dependent.

Earnings Season

The third-quarter earnings season continues this week, although investors may focus more on the election and the Fed meeting.

Palantir (PLTR) and Constellation Energy (CEG) will release their results on Monday, followed by Builders FirstSource Inc. (BLDR), Ferrari (RACE), and Super Micro Computer (SMCI) on Tuesday. SMCI shares were down nearly 45% last week after Ernst & Young resigned as the company’s accountant.

Reports from Qualcomm (QCOM), CVS (CVS), and Arm Holdings (ARM) are expected Wednesday, with investors watching for updates from Arm on its lawsuit against Qualcomm.

On Thursday, Pinterest (PINS), DraftKings (DKNG), Cloudflare (NET), and Affirm (AFRM) will release their results.