After the massive sell-off in tech stocks, US stocks face another crucial week: midterm elections, major earnings reports, and nonfarm payrolls taking turns

According to Zhitong Finance APP, major U.S. technology companies missed earnings expectations consecutively, triggering a sharp sell-off in the tech sector. However, the market tends to view this as a "revision of expectations" rather than a deterioration of fundamentals. This week's market focus shifts to the U.S. midterm elections, the October nonfarm payrolls report, and more heavyweight earnings reports. Meanwhile, after Binance suffered the largest crypto hacking incident in history, the restoration of trust and the future direction of regulation in the crypto industry have also become new focal points.

This week’s schedule is packed. On Monday, Apple (AAPL.US) and Palantir (PLTR.US) will report earnings, while chipmakers Tower Semiconductor (TSEM.US) and Lattice Semiconductor (LSCC.US) are also set to announce results. On Tuesday, attention turns to politics as the U.S. midterm elections are expected to impact a range of issues, from congressional control and the Iran war to the data center construction boom. On the same day, AMD (AMD.US) and Marathon Petroleum (MPC.US) will release their earnings, and the U.S. government will publish the Job Openings and Labor Turnover Survey (JOLTS), marking the week’s first major labor market data release.

On Wednesday and Thursday, heavyweight companies including Toyota Motor (TM.US), ConocoPhillips (COP.US), Eaton (ETN.US), Arm Holdings (ARM.US), McDonald’s (MCD.US), and Qualcomm (QCOM.US) will all release their earnings. The U.S. Treasury’s quarterly refunding announcement will also be closely watched, alongside several other sporadic economic data releases. On Friday, the October nonfarm payrolls report will be published, making it the most anticipated data of the week.

Tech Stock Sell-Off: Revision of Expectations, Not Fundamentals

Last week, U.S. tech stocks experienced a steep decline after a series of earnings reports failed to deliver the robust signals investors had hoped for.

Alphabet (GOOG.US) reported both revenue and profit below expectations, with its share price dropping 13%. CEO Sundar Pichai noted that while the company’s search division saw growth, the rise of artificial intelligence is eroding the monetization capability of search, causing revenue to lag behind growth. Amazon (AMZN.US) also missed both profit and revenue expectations, and even though AWS’s cloud business grew strongly, it didn’t prevent a sell-off. Intel (INTC.US) beat profit expectations and met revenue estimates, but weak PC sales overshadowed the positives, with the company attributing the weakness to rising memory costs. After the earnings release, Intel’s share price fell over 28%, wiping out about a quarter of its market value.

However, the paradox is that the earnings data were not uniformly bad; the real issue is that market expectations have risen. Barron's deputy editor, Al Root, said the results weren’t all bad news—instead, investors' requirements have increased.

From an operational standpoint, Amazon’s AWS division reported revenue of $45.9 billion, up 40% year-on-year and notably above expectations; Alphabet’s cloud business revenue reached $30.7 billion, beating analysts’ expectations of $29.1 billion; Intel’s data center and AI division posted revenue of $7.318 billion, also above expectations of $6.675 billion, and up 78% year-on-year. SanDisk (SNDK.US) exceeded both revenue and profit expectations but still faced selling pressure.

Evercore ISI’s Mark Mahaney, commenting on Amazon, wrote, “This is a revision of expectations, not a fundamentals correction.”

Binance Hit by Largest Crypto Hack Ever, Trust and Regulation Back in Spotlight

The world's largest cryptocurrency exchange, Binance, suffered a hacker attack last Thursday night. Investigators called it the largest cryptocurrency hacking event in history, with affected digital assets totaling $6.3 billion, which could make it the largest theft ever recorded.

After the incident, Binance said it had temporarily paused customer withdrawals and would use the user security asset fund and company reserves to cover all losses. Binance stated that user funds are safe and that deposits and withdrawals would remain suspended during the security review period. However, this could not prevent other major crypto assets from dropping: Ethereum fell 4% to about $2,200, and Binance’s token BNB slid over 5%.

The overall problem facing the crypto industry is: after billions of dollars are stolen from the largest exchange, what are the next steps? Owen Lau, Managing Director at Clear Street, said the industry must wake up to the need to protect client assets and establish robust cybersecurity systems to boost confidence. Coinbase (COIN.US) CEO Brian Armstrong stated on X that his platform has reached out to Binance to offer support, that their team will do everything possible to provide assistance, and emphasized that cooperation within the industry is needed now.

The crypto industry is lobbying Washington for legislation to make the regulatory environment more similar to the banking sector. After this attack, how the industry adjusts and regains trust is a key issue. Lau remarked that a robust regulatory framework is necessary to genuinely protect the industry and provide investor confidence, and such a framework does not yet exist.

Key Week in Washington: Midterms, Data Centers, and California Wealth Tax

This is a busy week in Washington. There will be 470 elections across the U.S., including all 435 seats in the House of Representatives and 35 Senate seats. On Friday, the U.S. Bureau of Labor Statistics will release the monthly nonfarm payrolls report, a key gauge of the labor market.

Some believe the jobs report is influenced by the midterms on several levels. The cost of living and the trajectory of artificial intelligence are major campaign topics that will affect the direction of the labor market in the coming years. Investors are especially watching critical elections that could shape the future for state-level data center development, such as the Ohio Senate race between Democrat Sherrod Brown and Republican Jon Husted, and the Texas governor’s race between incumbent Republican Greg Abbott and Democrat Gina Hinojosa.

California is also worth watching closely. Voters will decide the fate of Proposition 40, which proposes a wealth tax on billionaires. Meta (META.US) is issuing new shares to guard CEO Mark Zuckerberg’s voting rights in case he sells shares to pay the tax.

However, strategists remind us that companies make decisions with long-term considerations in mind, not just a single election cycle.

Seth Meyer, Global Head of Client Portfolio Management at JanusHenderson Investors, wrote, “Today, hyperscale data center operators are making massive investments in AI infrastructure to realize profit growth over the next decade or even longer. When making such long-term capital allocations, management teams consider potential changes in the macroeconomic cycle and regulatory environment.”

Friday’s Nonfarm Payrolls in Focus, Labor Market Strength Guides Fed Policy

Economists expect the October nonfarm jobs report, due this Friday, to show an increase of 55,000 positions. Last month’s report showed just 29,000 new jobs, far below expectations. Breaking it down, all the new positions are expected to come from the private sector; although the data center construction boom continues, manufacturing is expected to see zero growth.

A strong labor market was a key argument for the Federal Reserve’s rate hike in September and the potential for another hike in December. Any signs of weakness could complicate this outlook.

In addition, the Bank of England will announce its interest rate decision on November 5, widely expected to raise rates by 25 basis points to 4.0%. The Reserve Bank of Australia is set to announce its rate decision on November 3, expected to implement its fifth hike of the year. The global interest rate environment remains uncertain, and the pace of these two central banks will influence cross-currency rates and global interest rate trends.