The financial world pivots sharply this week with tech earnings reports, a Federal Reserve meeting, and oil prices reacting to shifting Middle East tensions.

On Tuesday and Wednesday, the Fed holds its policy meeting. Most investors expect the overnight rates to stay put between 3.5% and 3.75%, but betting markets still give about a 33% chance of a hike. While Fed Chair Kevin Warsh isn’t signaling a rate increase, some committee members are pressing for tightening, amid rising energy prices and uncertainties over oil supply affecting inflation prospects.

Big Tech Earnings and AI Spending Under the Microscope

Microsoft and Meta kick off the earnings wave Wednesday after the market closes, with Amazon and Apple following on Thursday. These four firms combined weigh heavily on the S&P 500, accounting for almost 17% of the index. Beyond the headline numbers, investors are zeroed in on AI investments, which amount to tens of billions spent on data centers, processors, and AI infrastructure across these companies.

Last week’s surprise came from Alphabet, which topped earnings estimates but sparked a selloff after boosting its AI infrastructure spending forecast, sending ripples through the broader sector. Meta is reportedly considering launching a cloud computing venture leveraging its idle compute capacity. Meanwhile, Amazon recently hiked hardware rental prices tied to AI model training. Apple’s shares hit fresh records fueled by new device excitement and rumors of an AI chip acquisition. But analysts warn that surging capital expenditures may soon outstrip operating cash flows, and markets are growing wary of additional debt or equity offerings.

Oil prices retreated sharply Monday, falling to about $91 a barrel after signs emerged of a temporary easing in U.S.-Iran confrontations. The reduction in conflict intensity temporarily alleviates some supply concerns that had pushed prices higher. Upcoming core PCE inflation and GDP data on Thursday could further influence the Fed’s stance and market direction.

Adding to the context, mortgage rates remain steady near 6.75% ahead of the Fed’s news, reflecting broader caution among investors. The entire setup this week highlights how intertwined global tensions, policy decisions, and tech sector investments shape market dynamics right now.