Wall Street investors are bracing for another volatile week as concerns over artificial intelligence (AI) investments, inflationary pressures and geopolitical tensions weigh on market sentiment. Investors will closely track key US inflation data, earnings announcements from major technology companies and developments in the Middle East for fresh cues on the direction of the stock market.
The outlook follows a sharp sell-off in major technology and AI stocks, which dragged down Wall Street's benchmark indices. Concerns that political developments following the US midterm elections could slow the expansion of data centres have added to uncertainty surrounding one of the biggest drivers of this year's stock market rally.
The US Consumer Price Index (CPI) report for October, scheduled for release on Tuesday, will be among the most closely watched economic indicators next week. Investors will examine the inflation figures for clues about the Federal Reserve's monetary policy decisions and the possibility of another interest rate increase in December.
The inflation reading assumes significance after the US central bank maintained interest rates last month, following a rate hike in September, its first increase in three years.
Market expectations have shifted towards tighter monetary policy following Friday's stronger-than-expected employment data. According to LSEG data, interest rate futures were indicating an approximately 80% probability of a rate hike at the Federal Reserve's December 8-9 meeting.