After the big sell-off in technology stocks, US stocks are entering another critical week: midterm elections, big earnings reports, and non-farmers take turns

The Zhitong Finance App learned that financial reports of major US technology stocks fell short of expectations one after another, triggering a sharp sell-off in the technology sector, but the market preferred to view it as a “correction of expectations” rather than a deterioration in fundamentals. This week's market focus immediately turned to the US midterm elections, October's non-farm payrolls report, and more weighted stock earnings reports; at the same time, after Binance was hit by the biggest crypto hacking incident in history, trust repair and regulatory trends in the crypto industry also became a new focus.

This week's schedule is intense. On Monday, Apple (AAPL.US) and Palantir (PLTR.US) released financial reports, and chip companies Tower Semiconductor (TSEM.US) and Lattice Semiconductor (LSCC.US) will also announce results. On Tuesday, the focus turned to politics, and the US midterm elections are expected to affect a range of topics from congressional control, the Iran war to the boom in data center construction. On the same day, AMD (AMD.US) and Marathon Crude Oil (MPC.US) released financial reports, and the US government released job vacancies and labor mobility survey (JOLTS) data, the first important labor market data of the week.

On Wednesday and Thursday, major stocks such as Toyota Motor Corporation (TM.US), ConocoPhillips (COP.US), Eaton (ETN.US), Arm Holdings (ARM.US), McDonald's (MCD.US), and Qualcomm (QCOM.US) will release financial reports. The US Treasury's quarterly refinancing announcement will also attract attention. In addition, sporadic economic data will be released. The October non-farm payrolls report will be released this Friday. This is the most watched data this week.

Tech stock sell-off: expected correction rather than fundamental correction

The tech sector of the US stock market fell sharply last week, and a series of previous earnings reports failed to give investors the strong signal they were expecting.

Alphabet (GOOG.US)'s revenue and profit fell 13% after falling short of expectations. CEO Sundar Pichai said that although the company's search department has grown, revenue has failed to keep up with the pace of growth as artificial intelligence erodes search monetization capabilities. Amazon (AMZN.US)'s profit and revenue both fell short of expectations, and despite strong growth in the AWS cloud business, the sell-off was not stopped. Intel (INTC.US)'s profit exceeded expectations and revenue was in line with expectations, but weak PC sales overshadowed the benefits. The company attributed the weakness to rising memory costs; after the financial report was released, Intel's stock price fell by more than 28%, and the market value evaporated by about a quarter.

However, the paradox is that the financial data is not completely deteriorating; the real problem is that market expectations have become higher. Al Root, associate editor of Barron's, said that not all of the performance figures are bad news; more precisely, it is an increase in investors' demands.

Judging from business data, Amazon's AWS division's revenue was 45.9 billion US dollars, up 40% year on year, clearly exceeding expectations; Alphabet's cloud business revenue was 30.7 billion US dollars, higher than analysts' expectations of 29.1 billion US dollars; Intel's data center and artificial intelligence division's revenue was 7.318 billion US dollars, higher than the forecast of 6.675 billion US dollars, up 78% year on year. SanDisk (SNDK.US) surpassed expectations in both revenue and profit, but it still experienced a sell-off.

Commenting on Amazon, Evercore ISI's Mark Mahaney wrote, “This is an expected correction, not a fundamental one.”

Binance was hit by the biggest crypto hacking incident in history, and industry trust and regulation were once again tortured

Binance, the world's largest cryptocurrency exchange, was hacked last Thursday night. Investigators say this is the biggest crypto hacking incident in history, affecting $6.3 billion in digital assets, and probably the biggest theft in history.

Following the incident, Binance said it had temporarily suspended customer withdrawals and would use users' secure asset funds and company reserves to cover all losses. Binance claims that users' funds are safe and suspends deposits and withdrawals while security checks have been completed. But that didn't stop other major crypto assets from falling: Ethereum fell 4% to around $2,200; Binance Coin and BNB fell more than 5%.

The question facing the crypto industry as a whole is what to do next after the billion-dollar theft on the biggest exchange. Clear Street managing director Owen Lau said the industry must awaken, protect customer funds, and put in place good cybersecurity systems to boost people's confidence. Coinbase (COIN.US) CEO Brian Armstrong said on the X platform that the platform has contacted Binance to provide assistance, the team will do its best to provide support, and said that industry cooperation is needed at this time.

The crypto industry is pushing for legislation in Washington, hoping to bring the regulatory framework closer to the banking sector. After this attack, how the industry can adjust and gain trust has become a key issue. Lau said that a good regulatory framework is needed to truly protect the industry and give investors confidence; there is currently no such framework.

Washington's Key Week: Midterm Elections, Data Centers, and California Wealth Tax

Washington has a busy schedule this week. The US will hold 470 election events, including all 435 seats in the House of Representatives and 35 seats in the Senate. On Friday, the US Bureau of Labor Statistics's monthly non-farm payrolls report will also be released, which is a key test of the labor market.

According to some opinions, employment reports were affected by the midterm elections at multiple levels. The cost of living and the development trajectory of artificial intelligence are the main topics of this election campaign, which will affect the direction of change in the labor market in the next few years. Investors are particularly concerned about key elections that may determine the direction of data center development pipelines in various states, including the Ohio Senate election, Democratic candidate Sherrod Brown against Republican Jon Husted; the Texas gubernatorial election; and current Republican Governor Greg Abbott against Democrat Gina Hinojosa.

California also deserves close attention. Voters will vote to decide the fate of Prop. 40, which proposes a wealth tax on billionaires. Meta (META.US) is issuing new shares to prevent CEO Mark Zuckerberg from weakening voting rights by paying taxes to sell shares.

However, the strategist cautions that companies focus on longer-term considerations when making decisions, rather than just focusing on an election cycle.

Seth Meyer, head of global customer portfolio management at JanusHenderson Investors, wrote: “Today, hyperscale data center operators are investing heavily in AI infrastructure to achieve profitable growth over the next decade or more. When making such a long-term capital allocation, the management team will take into account potential changes in the macroeconomic cycle and regulatory environment.”

Non-agricultural agriculture became the focus on Friday, and the strength of the labor market affected the Federal Reserve

Economists expect that the October non-farm payrolls report released this Friday will show 55,000 new jobs. Last month's report only 29,000 new jobs were added, far below expectations. Looking at the breakdown, all new jobs are expected to come from the private sector; despite the ongoing boom in data center construction, the manufacturing industry is expected to grow at zero.

A strong labor market is one of the key arguments for the Federal Reserve's interest rate hike in September and the possibility of another rate hike in December. Any sign of weakness could complicate this outlook.

Furthermore, the Bank of England will announce its interest rate decision on November 5. The market widely expects an interest rate hike of 25 basis points to 4.0%; the Reserve Bank of Australia will announce the interest rate decision on November 3, and it is expected to implement the fifth rate hike this year. The global interest rate environment is still uncertain, and the policy pace of these two central banks will affect cross-exchange rates and global interest rate trends.