US Stock Trends (October 26): Trump Again Raises Military Action Against Iran, AWS Compute Bookings Extended to 2028

Author: Trend Research

The Fed's interest rate decision and earnings reports from tech giants will take center stage this week. Over the weekend, Trump again mentioned military action against Iran, leaving energy supply risks unresolved; Amazon's CEO revealed that most of AWS's computing capacity for next year is already booked, with some reservations extending into 2028. Whether oil prices will retreat and whether the massive investments by tech companies will yield corresponding returns are the two key focal points for US stocks this week.

Dow Falls 1.23% on Friday, Semiconductors See Modest Rebound

On Friday, the S&P 500 fell 0.52% to close at 7,623.68 points; the Nasdaq Composite dropped 0.21% to close at 25,955.34 points; the Dow Jones Industrial Average declined 1.23% to close at 52,215.16 points. The VIX rose 2.21% to 19.45.

On the day, among the S&P 11 sector ETFs, Energy, Information Technology, and Real Estate posted gains, while the other eight sectors declined. Consumer Staples and Communication Services suffered the largest drops, while Consumer Discretionary, Financials, Industrials, Health Care, Materials, and Utilities also closed lower.

Among the Magnificent Seven, only Microsoft gained, up 0.66%; Apple fell 0.14%, Nvidia dropped 0.59%, Tesla declined 0.63%, Amazon lost 0.95%, Meta fell 0.96%, and Alphabet Class C shares declined 1.08%.

The Philadelphia Semiconductor Index rose 0.44%. AMD gained 1.74%, Intel rose 1.72%, and TSMC increased 1.49%. Memory stock performance was mixed; SK Hynix jumped 4.05% and Micron advanced 2.46%, while Western Digital fell 2.97%, SanDisk declined 1.82%, and Seagate dropped 1.81%.

The Nasdaq Golden Dragon China Index fell 0.84%. Alibaba dropped 2.14%, JD.com declined 1.25%, and Baidu fell 1%, while Hesai rose against the trend by 8.15%.

Near the close of trading in New York's bond market, the yield on 10-year US Treasury notes stood around 4.99%, and the 2-year yield hovered near 4.68%, both rising approximately 4 basis points from Thursday. Spot gold traded around $4,000 per ounce.

For the full week, the S&P 500 declined 0.47% and the Nasdaq dropped 0.71%, marking a second consecutive weekly loss for both indices; the Dow gained 0.41%. The Philadelphia Semiconductor Index fell 3.21%, the Golden Dragon China Index dropped 3.92%, and spot gold declined approximately 4%.

Early Monday morning, Bitcoin traded around $80,000 and Ethereum hovered near $2,330.

US-Iran Contacts Continue, No Concrete Plans Yet for Shipping Resumption

On Friday, the December WTI crude oil contract rose 3.82% to close at $103.27 per barrel; the Brent crude December contract climbed 3.14% to close at $116.72 per barrel. Both contracts gained 4.29% and 6.24% for the week, respectively.

Over the weekend, Trump stated that the US might strike Iran again or reach an agreement; he later added that no strike would occur on Sunday Eastern Time. Iran's Ministry of Foreign Affairs announced that both sides continue to communicate through intermediaries. However, Iranian media denied that Tehran had proposed a new plan to reopen the Strait of Hormuz in exchange for the US lifting its maritime blockade.

At the early trading session on Monday in Asia, US crude briefly dipped around 1%, while Nasdaq 100 index futures rose approximately 0.66%. With no clear arrangements yet for resuming shipping through the Strait of Hormuz, the morning pullback in oil prices is insufficient to indicate that supply tensions have eased. If high oil prices persist, they will drive up transportation costs and intensify inflationary pressures.

AWS Still Faces Unmet Demand Despite $220 Billion Investment

In an interview published last Friday, Amazon CEO Andy Jassy stated that AWS computing capacity for this year is fully sold out, most of the 2027 capacity is already booked, and a significant portion of 2028 capacity has secured customer commitments. The company will still retain certain resources for on-demand services.

Amazon previously projected capital expenditures of approximately $220 billion for this year. Jassy noted that even at this level of investment, demand cannot be fully met.

Advanced bookings from clients provide a foundation for future expansion. However, building data centers and procuring equipment require upfront spending, while revenue can only be recognized gradually after computing capacity becomes operational and customers begin using it. Consequently, robust order backlogs and cash flow constraints may coexist.

Amazon's earnings report this week will provide further details on AWS operations. The rollout pace of new computing capacity, revenue growth, and free cash flow are worth monitoring together. Earnings releases from Microsoft and Alphabet during the same period will also help investors assess whether revenue growth from this wave of AI expansion can keep pace with spending.

SpaceX Reportedly Negotiates Lease for 80,000 Cell Towers, AT&T Plunges Nearly 8%

Reports indicate that SpaceX is negotiating with telecommunications infrastructure firms, including Crown Castle, to secure usage rights for at least 80,000 cellular tower sites across the US to build an independent mobile communications network. Relevant agreements have not yet been finalized.

The news weighed on traditional carriers, sending AT&T down nearly 8% on Friday. For tower companies, the new entrant could bring increased lease revenue; for existing operators, it implies heightened competition for users and potential price wars.

Extending from satellite services to terrestrial networks, SpaceX's plan still faces hurdles in construction, spectrum allocation, and regulatory approvals. The final scale will depend on subsequent agreements.

This Week's Focus

All times are in Beijing Time.

Thursday 2:00 AM: Fed Rate Decision, Chair's Press Conference at 2:30 AM.

Pay attention to how the Fed evaluates energy prices and inflation, and whether any hints emerge regarding its inclination to adjust rates in December.

Thursday After US Market Close: Microsoft and Alphabet Release Earnings.

Watch cloud business growth, AI revenue, and capital expenditure guidance.

Thursday 8:30 PM: Preliminary Q3 US GDP, September Personal Income and Spending Report.

Consumer spending and business investment reflect economic growth trends, while the core PCE price index provides the latest clues on inflation.

Friday After US Market Close: Amazon and Intel Release Earnings.

For Amazon, monitor the commissioning progress of AWS's new computing capacity and cash flow; for Intel, watch data center business performance and profit margins.