【US Stock Market Outlook for the Week of Oct 19–23: Earnings Season Intensifies Amid Risks of Prolonged High Interest Rates: A Week to Gauge the Transition to an Earnings …

The US stock market is experiencing a turbulent phase with major indices showing divergent movements. Last week (Oct 12–16), selling pressure concentrated on large-cap tech and semiconductor stocks, while capital shifted toward defensive sectors, leading to a clear contrast in performance between sectors.

Currently, the market’s primary concerns are how long the Fed will maintain a high-interest-rate environment and whether companies can continue to generate sufficient profits under these conditions. Starting this week (Oct 19–23), major companies, including some tech mega-caps, will release their Q3 earnings, marking a test for the market as it transitions into an “earnings-driven” phase.

Review of Last Week

Last week, the US market saw a general trend of selling pressure across major indices. The Nasdaq Composite, with its high weighting in tech stocks, fell by approximately 4.5% for the week, while the S&P 500 dropped about 2%, marking a significant correction by recent standards. The three main factors that shook the market are as follows:

1. Significant Selling Pressure on Tech and Semiconductor Stocks

Throughout the week, the decline in large-cap tech and semiconductor stocks, which had been driving the Nasdaq, weighed on the market. On Friday, October 16, major semiconductor stocks were heavily sold, with Micron Technology falling 5.6% and Intel dropping 5.8%. This was driven by concerns over high valuations relative to AI demand and profit-taking.

2. Rebound in Interest Rates (Rise in US Treasury Yields) and Concerns Over Prolonged High Rates

With both CPI (Consumer Price Index) and PPI (Producer Price Index) growth exceeding expectations, the 10-year Treasury yield rose mid-week, reigniting concerns about additional rate hikes.

Rising interest rates act as a factor that lowers the theoretical stock prices of growth stocks, which had been bought at high valuations based on future growth expectations. This was another factor that triggered a shift in capital from tech stocks to relatively undervalued value stocks.

3. Earnings Season Kicked Off by Major Financial Institutions

The earnings season for the third quarter (July–September) of 2026 began with major financial institutions, starting with JPMorgan Chase (JPM) and Goldman Sachs (GS) on Tuesday the 13th.

While some results fell short of expectations, overall performance remained resilient. However, cautious outlooks regarding future increases in loan loss provisions and rising credit costs under high interest rates prevented a sense of relief in the broader market.

Key Earnings and Important Economic Indicators/Events for This Week

While there are no major economic indicator releases this week, many major companies will be reporting their earnings.

【Earnings Schedule for Notable Companies】

The earnings reports for Tesla (TSLA) and Meta Platforms (META) to be released after the market closes on Wednesday the 21st are of particular interest.
Please see below for details.

＜今週の主要・注目企業決算＞
20日（火）:
🅱️GEエアロスペース、ゼネラル・モーターズ、スリーエム、RTX、ハリバートン
🅰️ネットフリックス、インテュイティブ・サージカル、ユナイテッド航空
21日（水）:
🅱️AT&T、アボット、ネクステラ・エナジー、フィリップ・モリス… https://t.co/YtIdtEJrxj

— アメリカ企業リサーチラボ (@US_Research_Lab) October 18, 2026

【Notable Economic Indicators and Events】

• Monday, October 19
  NAHB Housing Market Index: Housing sentiment under high interest rates

• Thursday, October 22
  Initial Jobless Claims: Confirmation of labor market tightness

• Friday, October 23
  October S&P Global PMI: Preliminary figures for manufacturing and services

As inflation and interest rates continue to rise, this week will be about confirming the extent of the impact on the economy (by tracking PMI and unemployment insurance claims).

This week’s most notable theme: Re-evaluating corporate profitability and capital efficiency under persistent high interest rates.

The most important theme this week is whether mega-tech and major companies can manage increased interest payment costs and maintain profitability while the high-interest-rate environment remains ‘higher for longer’.

Until now, the stock market has been driven by AI expectations and growth stories, but with high interest rates becoming entrenched, investor scrutiny has become more severe. What the market is looking for is not just revenue growth, but the following two points:

1. Free Cash Flow (FCF) generation:
   How much cash is purely remaining while making massive AI infrastructure investments (CapEx)?

2. Realistic earnings outlook (guidance):
   Can they maintain a bullish outlook for the next period despite concerns about high interest rates and slowing consumption?

The roadmap for monetization in the face of increased capital expenditure, as presented by companies like Tesla and Meta Platforms, which report earnings this week, will be the turning point that determines whether the correction in tech stocks will bottom out or lead to further declines.

Advice and points of caution for Japanese investors

① How to approach the Tsumitate (installment) investment quota (index investing)

• Understand the benefit of buying more during price declines (Dollar-Cost Averaging)
  It is unsettling when the valuation of your holdings drops, such as the 4.5% decline in the Nasdaq last week, but for installment investing, this is a ‘golden opportunity’ to acquire more units at a lower price.
  Avoid getting emotional about market volatility under high interest rates and stopping or selling your investments; continuing to invest steadily according to your set schedule is the key to long-term wealth building.

• Prepare for exchange rate (USD/JPY) fluctuation risks
  While high US interest rates are a factor for a stronger dollar and weaker yen, the Bank of Japan has not abandoned its stance on continuing rate hikes, so there is a possibility of the yen strengthening during future interest rate fluctuations or periods of narrowing US-Japan interest rate differentials.
  Reconfirm that you are investing with long-term funds that you will not need for at least 5 to 10 years so that you do not panic if your yen-denominated valuation decreases due to exchange rates.

② How to approach the Growth Investment Quota (individual US stock investing)

• Avoid event risk immediately before earnings announcements (holding through earnings)
  This week is packed with important earnings reports, including Meta and Tesla.
  Speculative trading in anticipation of strong results can sometimes drive stock prices higher than expected just before an announcement. On the other hand, even if the results are solid, the stock price could plummet depending on the details. A prudent approach is to wait until the results and guidance are confirmed and the market’s assessment has settled before considering a trade.

• Diversification into sectors resistant to high interest rates and management of cash ratios
  A portfolio skewed only toward tech and growth stocks will have high volatility during periods of rising and persistent interest rates. Consider diversifying into sectors that are resilient to economic conditions and have stable cash flow even under high interest rates, such as healthcare, finance, and defense.
  Also, I recommend risk management by keeping 10–20% of your funds as cash (cash position) so that you can pick up high-performing stocks during unexpected sharp declines.

This week, third-quarter earnings announcements will be in full swing, and the selection of individual stocks is expected to become even more intense depending on the quality of their performance. Without being swayed by short-term price fluctuations, let’s stick to the principles of ‘continuing installment investments mechanically’ and ‘investing in individual stocks after carefully assessing their profitability under high interest rates’ to steadily build our assets.