The earnings week delivered a split verdict. Netflix beat on profit but cut Q4 guidance and slashed its full-year advertising forecast by $300 million. Meta beat on revenue but reported EPS of $3.83 against a $6.67 consensus after a $9.89 billion legal charge, and posted negative free cash flow for the first time since its 2012 IPO. Tesla beat estimates modestly with automotive gross margin recovering to 18.1% from the prior quarter. The S&P 500 fell 0.47% on the week to 7,623.68 and the Nasdaq dropped 0.7%, but the equal-weighted S&P 500 rose 1.1% and the Dow closed higher, extending the growth-to-value rotation for a second consecutive week. This week the macro calendar takes over while earnings season enters its second peak: FOMC decision Wednesday alongside Microsoft and Alphabet earnings, then Q3 advance GDP, September PCE, and Amazon earnings all land Thursday. Here is what to watch.
Market News, Week of October 26, 2026
Wednesday October 22 was the most important single night of the quarter. Tesla, Meta, and Netflix all reported after the close, and Thursday opened with a sector selloff that reversed the week's early gains. The Philadelphia Semiconductor Index fell 6.7% on Thursday, its worst single day since June. The Nasdaq-100 dropped approximately 2.9% Thursday alone as Meta's results hit the tape. But for the second consecutive week, the broader market held. Seven of eleven S&P 500 sectors finished flat or higher. The equal-weighted S&P 500 gained 1.1%. Small caps rose. The Dow was up on the week. The same story from the prior week extended: institutions are selling growth and high-multiple tech while rotating into value and defensive names ahead of the October 27-28 FOMC meeting.
Meta Platforms was the week's defining report. Revenue came in at $64.6 billion against a $63.31 billion consensus, up 26% year-over-year, a clear beat. But EPS printed at $3.83 against a $6.67 consensus after a $9.89 billion legal charge absorbed most of the operating profit. More significant than the EPS number: Meta reported negative free cash flow for the first time since its 2012 IPO. Q3 capital expenditure was $34.91 billion against operating cash flow of $32.79 billion. The company simultaneously raised the floor on its full-year capex guidance to $135-145 billion, up $5 billion from prior guidance. Reality Labs posted an operating loss of $4.13 billion in the quarter. The Q4 revenue guide of $73-$76 billion was ahead of consensus, but the market focused on what the cash flow statement was telling it: Meta is spending more than it is generating in operating cash to build the AI infrastructure underpinning Muse. The stock fell approximately 7% on the week to the $540 range, erasing a significant portion of the September Muse rally gains.
Netflix and Tesla gave cleaner reads. Netflix reported Q3 revenue of $12.87 billion, up 12% year-over-year, matching estimates. EPS was $0.87 against an $0.82 consensus, a beat. Operating margin expanded to 34.6% from 28.2% a year earlier. But Netflix cut its full-year 2026 advertising revenue forecast to approximately $2.7 billion from $3 billion and pushed the ad-supported tier expansion to 15 new countries back to 2027. Q4 EPS guidance of $0.67 came in below the $0.73 analyst consensus. Netflix shares fell approximately 6% after hours. Tesla reported revenue of $28.05 billion, roughly flat year-over-year and slightly above the $27.62 billion consensus. Non-GAAP EPS was $0.48 against a $0.45 estimate. The number that mattered: automotive gross margin excluding regulatory credits recovered to 18.1%, up from 16.3% in Q2. GAAP net income fell 43% to $787 million as research and development spending jumped 69% to $2.76 billion, driven by Optimus, Cybercab, and AI infrastructure. Tesla also reduced its full-year 2026 capital expenditure forecast to approximately $20 billion from a prior expectation above $25 billion.
The combined earnings picture changed the FOMC setup. Hike odds for October 27-28 fell from the 20-25% range entering the week to approximately 6-10% by Friday. The combination of Meta's negative free cash flow, Netflix's ad revenue guidance cut, and ongoing echoes of the 29,000 September jobs print made it difficult for any FOMC official to construct a case for tightening further on October 28. December is now the market's consensus live date for any remaining hike in 2026. The Fed Chair Kevin Warsh press conference Wednesday afternoon is the week's most consequential communication event, not the decision itself.
Economic Calendar, Week of October 26, 2026
Monday, October 26: No major scheduled data releases. Watch pre-FOMC positioning in rate-sensitive names through the session. The two-day FOMC meeting begins Tuesday, so Monday is the last full trading day before the Fed goes into its blackout communication window. Any move in the 10-year yield Monday will signal whether the bond market is still pricing December hike risk or beginning to price rate cut optionality for 2027.
Tuesday, October 27: FOMC meeting begins, day one. Conference Board Consumer Confidence for October releases at 10:00am ET (impact: Medium). Consumer confidence has been the steadier of the sentiment indicators after the University of Michigan final October read last Friday. A confidence reading below 95 heading into the FOMC decision would give the committee additional cover for a hold and frame December as data-dependent rather than certain.
Wednesday, October 28: FOMC rate decision at 2:00pm ET (impact: Very High), Microsoft and Alphabet both report Q3 earnings after the close. The federal funds rate is expected to hold at 3.75%-4.00% with approximately 90-94% probability. This is a non-SEP meeting, no updated projections or dot plot. Fed Chair Kevin Warsh's press conference at 2:30pm ET is the day's most consequential event. Microsoft consensus is approximately $3.10 EPS on $68.7 billion in revenue, with Azure cloud growth the primary focus. Alphabet's Q3 print will show whether Google Search and YouTube ad revenue are holding after Meta's mixed advertising signal last week. Wednesday night delivers both the Fed's rate path signal and the two largest non-Meta hyperscaler reports in the same window. Pending Home Sales for September (10:00am ET) and MBA Mortgage Applications also release Wednesday morning.
Thursday, October 29: Q3 2026 advance GDP estimate, September PCE inflation, and Amazon Q3 earnings all in the same 24-hour window (impact: Very High). Q3 advance GDP consensus is approximately 3.2% annualized, with the Atlanta Fed GDPNow model tracking 3.5%, well above Q2's 2.2%. September PCE consensus: headline 3.7% year-over-year (up from 3.4% in August) and core 3.1% year-over-year (up from 3.0%). A core PCE re-acceleration to 3.1% the morning after a Warsh hold would immediately reset December hike odds higher. Amazon reports Q3 after the close Thursday, with AWS cloud revenue growth and advertising revenue the two numbers that complete the hyperscaler earnings picture alongside Microsoft and Alphabet. Initial Jobless Claims for the week ended October 24 also release at 8:30am ET, prior 194,000.
Friday, October 31: Chicago PMI for October (9:45am ET, impact: Medium). Employment Cost Index for Q3 (8:30am ET, impact: High). The ECI is a broader and less volatile measure of labor cost pressures than the monthly AHE reading and is one of the Fed's preferred wage-inflation gauges. A Q3 ECI above 4.5% year-over-year would be the wage-inflation signal that keeps the Fed's tightening bias intact heading into December, regardless of Thursday's GDP and PCE outcomes.
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