Five things to watch in markets in the week ahead

Investing.com - A slew of U.S. tech groups will announce their latest results this week, which could shed some light on the trajectory of soaring hype around artificial intelligence. Meanwhile, several Federal Reserve members are due to speak, just days after the central bank slashed interest rates and signaled that more drawdowns could be coming. Policymakers will also be able to look through a new gauge of inflation, and possible tariff-fueled price hikes may a focal point of earnings from warehouse retailer Costco.

1. Tech earnings this week

Attention this week now turns to a fresh slate of tech industry earnings, with analysts suggesting that the figures may provide some updated insight into the state of a boom in enthusiasm around AI.

The nascent technology’s soaring popularity has underpinned a surge in broader stock markets, making any developments around it or the companies looking to harness it a central focus for investors.

On Tuesday, Micron is due to report after the closing bell. Sentiment has been upbeat around the chipmaker, especially in the wake of blockbuster returns from peers like Broadcom and Oracle as well as a range of favorable sell-side preview notes, analysts at Vital Knowledge said.

Electronics component manufacturer and Apple-supplier Jabil, which has been betting heavily that the data centers powering AI will fuel strong infrastructure services demand, will also post quarterly earnings on Thursday. Consulting giant Accenture is set to unveil results on the same day, although analysts have flagged worries around the impact of AI on its business.

2. Fed speakers in focus

With the Fed having slashed interest rates by 25 basis points last week, the market’s focus will be on comments from a range of speakers from the central bank this week.

Highlighting the schedule is Fed Chair Jerome Powell, who is due to speak on Tuesday. Following the Fed’s decision, Powell told reporters that a weakening U.S. labor market was the main impetus behind the rate reduction.

Still, Powell flagged that there are "no risk-free paths," particularly as signs of sticky inflation linger in the outlook for the world’s largest economy.

"We have to keep our eye on inflation at the same time, we cannot ignore [...] maximum employment," Powell said.

Yet Fed officials were not unanimous in support for the rate cut, with one member -- suspected to be new Fed Governor Stephen Miran, who was a senior adviser to President Donald Trump prior to his confirmation to the post -- calling for a deeper half-point drawdown.

Seven of the 19 meeting participants also pencilled in projections for no more cuts this year, while others called for further reductions, suggesting that the upcoming gatherings of the central bank could feature fierce debate.

3. PCE ahead

Fed policymakers will have the chance to parse through a fresh gauge of inflation on Friday.

The so-called "core" personal consumption expenditures price index for August is tipped to come in at 0.2% month-on-month, compared to a prior reading of 0.3%.

Officials at the Fed have often used the metric to track the pace of price gains in the world’s largest economy.

A separate measure of consumer prices rose in August, while the annual rate was the fastest in seven months. Analysts at BNP Paribas flagged that the numbers suggested that inflation is "unlikely to land" at the Fed’s target rate of 2% "anytime soon."

4. Costco to report

Elsewhere, Costco is due to unveil its quarterly returns on Thursday.

Investors will likely be keen to see how the members-only warehouse retailer is coping with sweeping U.S. tariffs. The firm promised earlier this year that levy-fueled price rises would be a "last resort."

Costco’s peers, including Walmart and Target, have said that some price increases on customers are already in place and more may be on the way. But executives at electronics seller Best Buy said the hikes have been lower than the overall tariff rate.

The duties have threatened to become a drag on shoppers’ spending appetites. A recent gauge of consumer sentiment from the University of Michigan showed that "trade policy remains highly salient" and is factoring into how households perceive risks to their pocketbooks.

5. Gold notches new record high

Gold prices touched a new record peak on Monday, as the prospect of more U.S. interest rate cuts after the Fed’s recent borrowing cost drawdown supported the outlook for bullion.

Markets remained biased towards gold before several more key U.S. economic readings this week, including the Fed’s preferred inflation gauge. Several Fed policymakers are due to speak as well.

Lower rates bode well for non-yielding assets such as the yellow metal, given that they lower the opportunity cost of investing in the sector. Broader metal prices have also advanced after the Fed’s cut.

Spot gold rose 0.9% to $3,715.50 an ounce, while gold futures rose 1.2% to $3,750.20/oz by 03:32 ET.