Tech Gains Persist, But Stocks Face AI, Data Test

Published as of: November 3, 2025, 9:13 a.m. ET

(Monday market open) Data return this week, even if Congress doesn't. A full roundup of private reports on jobs, layoffs, sentiment, and factory health await investors in coming days, along with earnings from several firms in the heart of the AI market. If all this stirs up an appetite, McDonald's (MCD) and DoorDash (DASH) also share results. Stocks kept rising early Monday, lifted by momentum in the tech sector that sent shares of Nvidia (NVDA) and other chip names higher before the open.

Data releases begin with today's ISM Manufacturing PMI for October due at 10 a.m. ET. Then on Wednesday, the ADP employment report could provide insight into the pace of hiring, and the University of Michigan preliminary November consumer sentiment reading wraps up the week Friday. Most major U.S. indexes hit record highs last week, but price action was tentative Thursday and Friday. The market may be heading into a catalyst "air pocket" after last week's flurry of mega cap earnings, Fed funds rate cut, and China trade news, said Nathan Peterson, director of derivatives research and strategy at the Schwab Center for Financial Research.

Stocks rebounded Friday after five Magnificent Seven earnings reports confirmed aggressive AI spending and solid cloud growth. The next mega cap is Nvidia (NVDA) on November 19, while this week's tech basket includes Palantir (PLTR) later today and Advanced Micro Devices (AMD) tomorrow afternoon. Both could provide new insight into AI demand, and so could Constellation Energy (CEG), which reports Friday and has soared this year on AI-related demand. To date, 64% of S&P 500 companies have reported, with 83% beating estimates on the bottom line and 79% on the top line, FactSet said. "Earnings reports from the 'Fab 5' were strong across the board," Peterson said. 

1. Not all mega cap spending seen equally: One likely reason shares of Alphabet (GOOGL) and Meta Platforms (META) went separate ways after earnings last week could rest with investor perceptions of how quickly each is "monetizing AI," so to speak. Both forecast higher spending on AI infrastructure, but investors appeared unenthusiastic about Meta's plans while giving Alphabet a hall pass. That could be because investors feel Alphabet's cloud, search, and AI growth reflect positive impact from its AI investments but aren't so sure Meta—without a cloud business—has proven the link between spending and long-term earnings growth. This leaves investors with the question of whether companies are over-investing in AI, even if spending gets a warm welcome as it did with Alphabet and Amazon (AMZN). The answer is, it depends. "Over-investing is in the eye of the beholder," said Kevin Gordon, Schwab's head of macro research and strategy, in his most recent video. "When you're analyzing this at the company level, at the industry level, especially from an investment perspective, I think you need to keep in mind what the company or what the industry's balance sheet looks like, what the strength and the fundamentals look like, and then use that to judge whether it is classified as an overinvestment."
    
2. Manufacturing barometers ahead, behind: Last week's monthly manufacturing PMI data from China dipped to a contractionary 49.0, and could be one factor driving Beijing to smooth its trading relationship with the U.S. A reading of 50 or higher is needed to reflect expansion, and October's figure was the worst drop in six months. New orders shrank, partly due to foreign trade barriers, Bloomberg noted, and the government's survey noted "increased complexity in the global environment." All this poses challenges for China's economy with U.S. tariffs at 47% on Chinese goods. The U.S. gets its turn today, with the ISM's October Manufacturing PMI due at 10 a.m. ET. Last time out, it was 49.1, up from 48.7 in August, and analysts expect another climb to nearly 50. Tariffs have hurt U.S. manufacturing all year, but things were already weak long before the tariffs came along. Manufacturing has been in a slump for more than two years, and the prices paid metric has been above 60 for months, a relatively high level. Any dips under that might relieve some inflation concerns, though manufacturing is a small portion of the overall economy. Another report that could reflect manufacturing and the broader economy is the Challenger October layoffs data due Thursday, which could get a closer look than usual after several high-profile layoff announcements from major firms like Amazon and United Parcel Service (UPS).
    
3. Dollar warms, yen cools: After suffering its worst open to a year in decades, the U.S. dollar has been on a tear the last few days and is near three-month highs. Part of this reflects the Fed's more hawkish language around future rate cuts, because the dollar would be more likely to stay firm if the Fed keeps monetary supply relatively tight. Also, a weak yen plays into this. The Bank of Japan (BoJ) has paused its rate hiking cycle and likely won't make another adjustment until fiscal policy becomes clearer under the new prime minister. Stocks in Japan continued to rally last week while the yen fell to its softest point versus the dollar since February. Prime Minister Sanae Takaichi tilts toward easy monetary policy and fiscal expansion, Bloomberg reported, which could be helping Japanese stocks but hurting the yen. Firmness in the dollar could become a headwind for U.S. exporters if it lasts, but even at current levels just below 100, the dollar index ($DXY) trades well below its 2025 peak above 110. Aggregate S&P 500 revenue exposure to international markets is 42%, according to FactSet, with info tech in the lead at 55% exposure.

• Berkshire Hathaway (BRK.B) ticked up almost 1% after reporting earnings Saturday. Third-quarter operating profit rose 34% year over year, and cash holdings reached more than $381 billion as the company elected not to buy back any shares. Berkshire sold $6.1 billion more in stocks than it bought in the third quarter.
   
• Kenvue (KVUE) soared 20% in pre-market trading after Kimberly-Clark (KMB) announced it was buying the maker of Tylenol and other drugs in a $48.7 billion deal. Kimberly-Clark said it expects combined annual revenues of around $32 billion. Shares of KMB tumbled nearly 15% following the news.
   
• Palantir (PLTR) rose 2.6% before its post-close earnings report . Investors will be looking for continued adoption momentum of Palantir's AI platform. The company could also provide insight on investors' sentiment toward AI and help validate whether corporations are turning AI capabilities into tangible revenues and profits.
   
• Nvidia climbed 1.9% ahead of the open despite President Trump hinting that Nvidia's advanced Blackwell chip would not become available in China. 
   
• Micron (MU) posted 3% early gains, lifted by an 11% rally for a South Korean memory chip competitor that could be evidence of growing demand for memory and storage hardware, Barron's reported.
   
• Roku (ROKU) climbed nearly 3% ahead of the open, drawing support from solid earnings last week and an upgrade to Overweight from Neutral by Piper Sandler. 
   
• Iren (IREN) soared 21% after the Australian company agreed to a $9.7 billion deal to sell AI cloud capacity to Microsoft (MSFT), Barron's reported.
   
• Rare earth stocks including NioCorp Developments (NB) and MP Materials (MP) drifted lower early Monday following last week's news that China would suspend some of its controls on rare earths as part of its deal with the U.S.
   
• Beyond Meat (BYND) plunged 8% early Monday after the company delayed its third quarter results. It now reports November 11, CNBC said.
   
• Bitcoin (/BTC) fell nearly 2% early Monday and shares of stocks linked to crypto, including Coinbase (COIN) and Strategy (MSTR) fell 1% to 2%. Bitcoin is coming off a lackluster week, with futures remaining under the 50-day moving average of $113,738 and holding not far above the 200-day, which rests near $104,000.Worries about a more hawkish Fed have weighed on crypto.
   
• Breadth remains a sore spot. Less than 54% of stocks traded above their 200-day moving average as of Friday's close, while just 40% traded above their 50-day moving average. This might be another indication that the strong bullish uptrend could be losing steam.
   
• Futures trading builds in a 67% chance of a 25-basis point cut in December, according to the CME FedWatch Tool. That's down from 90% odds before last week's Fed meeting raised doubts.
   
• For the month of October, the Dow Jones Industrial Average rose 2.51%, the S&P 500 index climbed 2.27%, and the Nasdaq Composite added 4.7%. The S&P 500 is on a six-month win streak. But the S&P 500 Equal Weight index (SPXEW) fell 1% in October, a sign that performance of the weighted SPX increasingly reflects the largest stocks.

Trader's eye view: In Schwab's Weekly Trader's Outlook, my colleague Nathan Peterson notes that despite the Fed's 25-basis point rate cut last week, the "future trajectory of rate policy remains cloudy." 

Though major indexes ended October just off recent record highs, the one-month chart of the U.S. dollar index ($DXY-candlesticks) and U.S. 10-year Treasury yield (TNX:CGI-purple line) could throw some November chill on Wall Street's party. Rising yields and a dollar that's now at nearly four-month highs could potentially slow the equities rally. Higher yields raise costs for companies and consumers, and a stronger dollar makes U.S. products more expensive for overseas buyers, dampening demand.