Key US Stock Market Events This Week: Fed Officials Speak in Droves, Middle East Tensions and US-China Summit Move Markets

U.S. stock market investors will focus this week on the interest rate trajectory, Middle East tensions, the U.S.-China summit and technology issues, as well as calls to slow the development of artificial intelligence (AI), while weighing whether major stock indexes can set new record highs. The market will continue to digest the Federal Reserve's decision last Wednesday. The Fed raised rates for the first time in three years, aiming to curb above-target inflation. Although the hike was widely expected, investors remain uncertain about how many more times the Fed will ultimately raise rates and what that will mean for already elevated U.S. Treasury yields. In recent weeks, stocks have been buffeted by rising U.S. Treasury yields and surging oil prices amid escalating Middle East conflict. B. Riley Wealth chief market strategist Art Hogan said the benchmark 10-year Treasury yield reaching 5% and oil prices reaching $100 per barrel constitute "psychological thresholds." Hogan said staying below those levels "gives market participants a brief sigh of relief and makes them more willing to participate." When those indicators rise above those levels, "what we've seen over the past four or five weeks is that the market views these headwinds as difficult to overcome." Last Thursday, stocks rose as oil prices and yields fell. U.S. crude fell to $101 per barrel, and the 10-year Treasury yield dropped to 4.93% in late trading. The Middle East situation remains a risk variable that cannot be ignored by the market this week. According to reports, U.S. President Trump said in an interview on September 20 that the United States is in a "decision-making phase" on the Iran issue, and "very major things" will happen "soon." Trump said the options currently on the table include "completely destroying Iran," allowing Iran's economy to continue deteriorating, or reaching an agreement. Qatari Foreign Ministry spokesperson Majed Al-Ansari said the same day that Qatar is maintaining communication with the United States and Iran to push for the resumption of U.S.-Iran negotiations. He said multiple U.S. government officials have indicated that the U.S. side hopes to reach an agreement and end the conflict. Fed officials to speak intensively, market closely watching for rate clues Thursday's rally brought the benchmark S&P 500 index up more than 11% so far this year, about 2% below its record high set in mid-August. A rate hike could raise borrowing costs and slow the economy, posing a potential challenge to stocks. But last Wednesday's action was largely priced in by the market before the meeting. Investors also viewed the decision as a credibility test for new Fed Chair Kevin Warsh, to gauge whether the Fed would raise rates despite repeated calls by U.S. President Trump for rate cuts. Trump chose Warsh to serve as Fed chair. Charles Schwab chief trading strategist Joe Mazzola said the meeting "got us past a major hurdle." Investors are now watching for signs of when the Fed might raise rates again. Fed funds futures late Thursday showed roughly a 50% chance that the Fed will raise rates at its next meeting in October, which falls just before the U.S. midterm elections. A number of Fed policymakers will speak this week. Among them, 2027 FOMC voter and Chicago Fed President Goolsbee will speak on Monday, permanent FOMC voter and New York Fed President Williams and Fed Vice Chair Jefferson will speak on Tuesday, Richmond Fed President Barkin will speak on Wednesday, and so on. Given that Warsh himself has said he wants to avoid providing forward guidance on the rate path, any clues about the Fed's plans for this rate-hiking cycle could be especially important. Hogan said: "In the absence of guidancewhich is truly the new normal under Chair WarshI think listening to those willing to speak becomes even more important." U.S.-China summit and technology issues in focus Economic data this week are relatively light, with surveys of manufacturing and services activity and a consumer confidence survey potentially providing information on inflation trends. Durable goods orders data due Friday is an important indicator for tracking the direction of U.S. manufacturing activity. It can reflect corporate investment intentions and consumption trends in advance and is a leading signal for gauging the temperature of the economy. It is worth noting that investors will pay close attention to this week's U.S.-China summit. Issues such as the AI development race and semiconductor-related restrictions could affect the market, especially technology stocks. The technology sector accounts for 38% of the S&P 500. Although it has risen more than 20% so far this year, it has pulled back somewhat since early June. Mazzola said: "Tech stocks need to return to the lead position before we can see new record highs." AI is also drawing attention. Previously, industry leaders issued stark warnings about the dangers of this emerging technology and called for slowing its development. Concerns about slower capital spending have weighed on the share prices of semiconductor companies at the center of the AI boom. Investors are watching trends in the AI spending theme, including possibly stricter industry regulation. The AI spending theme has been a major DRIVE for the stock market this year. Franklin Templeton Institute chief investment strategist Jeff Schulte said any stock market weakness triggered by such developments could be a buying opportunity. "I doubt whether there will be regulatory measures that truly limit the pace of investment and model development," he said. Schulte said that despite strong overall corporate earnings, the S&P 500 has been roughly flat over the past few months, which "ultimately will provide a good valuation base for the market to move higher." He said: "This is a very positive setup for risk assets, especially if we continue to see long-term bond yields decline somewhat." In addition, investors this week will also see technology conferences such as Qualcomm's Snapdragon Summit and Meta's developer conference. The Nasdaq 100 quarterly rebalance will take effect before the U.S. market open on September 21, at which point SpaceX's weight in the index will rise to 2.82%, a sharp increase from its current weight of about 1.28%; on the same day, S&P Dow Jones Indices' quarterly rebalance will take effect, with Palo Alto Networks, Arista Networks, SanDisk, and Dell added to the S&P 100, and Bloom Energy and Illumina added to the S&P 500.