View From the Circle: A Big Tech Test

The market’s relentless chug higher will be put to the test as Big Tech earnings roll in.

The busiest week of the fall has arrived. Stocks rallied on Friday as a cooler-than-expected inflation reading fueled rate cut hopes. The S&P 500 , Nasdaq Composite , Dow Jones Industrial Average and Russell 2000 closed at all-time highs.

The market’s relentless chug higher will be put to the test again in the week ahead as 175 S&P 500 companies are set to report quarterly results and the Federal Reserve’s next interest rate decision looms on Wednesday.

Tech giants Apple, Alphabet, Amazon, Meta and Microsoft are all set to report with the market’s AI bet in particular focus.

“We expect the more significant test to index price action will come as this is where heightened expectations will come into play,” Citi US equity strategist Scott Chronert wrote in a note to clients on Friday.

That test comes as a flurry of headwinds have continued to mount on the market rally. The government shutdown remains in place, credit concerns have risen, and some signs of investor sentiment appear stretched.

Our own sentiment measure that we track here at the Barron’s Investor Circle, the Vestmo Market Barometer, has flipped more cautious the past two weeks. As you can see on the meter above, the indicator suggests a more neutral risk stance, holding narrowly in the range that recommends a 60% allocation to stocks and 40% to bonds.

Vestmo’s quant strategy team tells us that the market could move back to more risk on if the labor market cools without credit stress and the Fed continues to ease rates. On the flip side, lower rates alongside widening credit spreads, continued trade frictions, or a prolonged shutdown could keep shifting the barometer further into risk-off.

Live Q&A

I recently sat down with Barron’s Investor Circle’s Dan Victor to break down his Progress Software pick. We also discussed the possibility of a Nike turnaround, Netflix earnings and the stock market’s broad resilience in the face of mounting headwinds. You can watch the full conversation by clicking the image below.

Look out Tuesday night for our latest exclusive stock pick, and then join us for a Q&A with the reporter on Wednesday at noon to discuss. You can register for the live show here. We’ll be answering any of your burning market questions either related to our stock picks or any other broad themes catching your eye live!

Circle Voice

We want to hear from you! Please click here to answer our latest investor sentiment survey for Barron’s Investor Circle subscribers.

Right now we’re asking: Are you bullish or bearish on the market now? What’s the biggest risk for the stock market?

Circling Back

Parker Hannifin stock added 20% since Barron’s first picked it in August 2024. This week, our Al Root and Teresa Rivas doubled down on that call. Specifically, they highlighted how Parker Hannifin’s shift toward more aerospace revenue sets the company up for stronger growth moving forward. Aerospace accounted for 31% of revenue in the recently completed fiscal 2025, up from 16% in fiscal 2022. Read more here.

Other recent picks in the news:

🎬 Warner Bros. Discovery said this past week it’s looking to sell itself. A Barron’s stock pick, Paramount Skydance, could be a potential buyer. Paramount Skydance stock didn’t move too much during the eventful week with shares down less than 1%, but that ongoing deal discussion will be one to watch for Andrew Bary’s pick.

🏅 Our Newmont pick has been a winner, returning about 23% since we picked it on Aug. 13. The stock, which was up 139% this year at one point, came under pressure on Friday as earnings that beat Wall Street expectations weren’t enough to move shares higher.

Reader Insights

During our live Q&A this past week, an audience member asked about Netflix as the stock fell more than 10% following its third quarter earnings release which fell shor t of Wall Street’s expectations. Here’s what I believe Netflix earnings were telling us about the broader market environment this earnings season:

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“We’re in a market where valuations are stretched, where the market has run very high and very hot. You really need to come out and say something that’s going to wow the street. And I don’t think Netflix did that…I don’t think anyone’s worried about Netflix going away tomorrow. But maybe it’s just not the market environment for the results they provided.”

Like Newmont, Netflix was a highflying name this year that failed to please investors following a solid run up in the stock. These stock reactions will be important context headed into Big Tech earnings this week where stock returns have already soared over the past several years.

Thoughts on this newsletter? Ideas for more content? Email me at Josh.Schafer@barrons.com