Key stock market events of the week: Fed, ECB and U.S. GDP

The week is being decided by central banks and the price of money: stock market keys for the week

This week’s stock market clues are pretty clear: on Wednesday, October 28 at 19:00 (12:00 in Mexico City) the Fed speaks, on Thursday, October 29 at 14:15 (7:15 in Mexico City) it’s the ECB’s turn, and in between, on Thursday, October 29 at 13:30 (6:30 in Mexico City), U.S. GDP is released. For me, this is not a week to look for drama, but to gauge whether the market really accepts higher rates for longer or whether it goes back to fantasizing about quick cuts. Meanwhile, on Friday, October 23, the S&P 500 closed at 7,623.68 points and the IBEX 35 at 18,989.80, while Brent starts this Monday at $109.97.

Week calendar (Madrid time)

Central banks and macro: the market tests its faith in pauses

The main focus is the Federal Reserve. The market comes into Wednesday, October 28, expecting rates at 4.00% and facing an uncomfortable benchmark: in September, the Fed raised rates by a quarter point to the 3.75%-4.00% range. If it holds now, what will matter is not the move itself, but the tone. With the S&P 500 closing on Friday, October 23 at 7,623.68 points and U.S. 10-year Treasury yields at 4.988%, the bar for a complacent reading is high.

A day later comes the ECB, with the main refinancing rate expected to stay at 2.65%. What I focus on there is less the decision, which looks priced in, and more any nuance on inflation, credit and monetary transmission. On Friday, October 30, the macro block wraps up with Germany’s preliminary GDP at 10:00 (3:00 in Mexico City), the euro area’s at 11:00 (4:00 in Mexico City) and Spain’s preliminary CPI at 09:00 (2:00 in Mexico City). If European growth keeps cooling but inflation does not clearly ease, the ECB will have little room to sound dovish. Cheap money always seems like a good idea until it stops being one.

Corporate earnings: Alphabet, Microsoft, Amazon and Santander set the pace

The micro side is also in play. On Tuesday, October 27, Visa reports after the Wall Street close and Coca-Cola before the open. On Wednesday, October 28, two names that truly matter for indices and the narrative arrive: Alphabet and Microsoft, both after the Wall Street close, plus Santander before the open and BBVA after the close. Thursday, October 29 will be Amazon’s and Intel’s turn after the close, with Eli Lilly, Mastercard, Caterpillar, Shell and TotalEnergies before the open. And on Friday, October 30, ExxonMobil, Chevron, BP and AbbVie report before the open.

The mechanism here is simple: if big tech keeps supporting sales and margins, the market will be able to tolerate more demanding rates. If it stumbles on revenue, capex or guidance, the week could turn quickly because valuation is offering no freebies. In Europe, Santander and BBVA matter for a less glamorous but more useful reason: they say a lot about margins, funding costs and the pulse of credit.

Geopolitics and commodities

Brent starts this Monday, October 26 at $109.97, down 5.78% from Friday’s close, after ending that session at $116.72. That correction cools part of the immediate inflation fear, but it does not remove the risk. If crude stabilizes after the drop, central banks will breathe a little easier; if it rebounds sharply, the market will again remember that energy still matters more than equities would like. Gold, at $4,020.50, also remains a hedge that does not usually show up by chance.

My view

I think the change from last week is less about the indices and more about the sequence of risk. On Friday, October 23, the S&P 500 fell 0.52% and the Nasdaq 0.21%, while the VIX ended at 19.45. That is not panic, but it is not complacency either. To me, the market is heading into a serious test: it wants to hear a pause from the Fed and the ECB, but it also needs that pause not to come with an uncomfortable message about persistent inflation. And there I tend to be skeptical. When the cost of money stops falling, the stock market has to justify every multiple better.

What would make me change my mind? A very specific combination: that on Thursday, October 29 at 13:30 (6:30 in Mexico City) U.S. GDP does not disappoint, that core PCE stays contained, and that the Fed at 19:00 (12:00 in Mexico City) and the ECB at 14:15 (7:15 in Mexico City) keep a watchful bias without closing the door to tightening further if needed. The main risk I see is the opposite scenario: growth holding up, inflation refusing to ease, and stocks still trading as if the central bank’s next natural move were to cut rates. That shortcut rarely comes cheap.

Week keys

• The Fed decides on Wednesday, October 28 at 19:00 (12:00 in Mexico City), with rates expected at 4.00%.
• The ECB decides on Thursday, October 29 at 14:15 (7:15 in Mexico City), with the main rate expected to stay at 2.65%.
• U.S. advance GDP on Thursday, October 29 at 13:30 (6:30 in Mexico City) could change the tone for the whole week.
• U.S. core PCE, also on Thursday at 13:30 (6:30 in Mexico City), matters more than many speeches.
• Alphabet and Microsoft report on Wednesday after the Wall Street close; Amazon on Thursday after the close.
• Santander reports on Wednesday before the Wall Street open and BBVA on Wednesday after the close.
• On Friday, October 30, Germany and euro area preliminary GDP are released, along with Spain’s advance CPI.
• Brent starts the week at $109.97: if energy tightens again, the inflation truce would not last long.

For anyone following these stock market keys for the week, the order matters. First, central banks. Then growth and inflation. And only then earnings. Sometimes the market does the exact opposite; then the surprises come and it pretends nobody saw them coming.

To go deeper

• My previous analysis: Stock market keys for the week: macro, oil and earnings
• Stock market investing guide — basic concepts to make better decisions

This article is general financial information and does not constitute investment advice. Investing involves a risk of losing the invested capital.