Wall Street rebounds as tech stocks bounce back ahead of Netflix, Tesla, Meta earnings

U.S. stocks rebounded Monday after their worst week since June, with the Nasdaq Composite climbing 1.11% to 26,430.89 and the S&P 500 adding 0.41% to close at 7,690.73. The Dow Jones Industrial Average slipped slightly, down 36.38 points, or 0.07%, to 51,966.03, as traders positioned for a crowded week of earnings from some of the market's largest technology companies.

The gains came a week after the Nasdaq tumbled 4.5% and the S&P 500 lost nearly 2%, snapping a four-week winning streak amid renewed doubts about how much more big technology companies can keep spending on artificial intelligence infrastructure before it shows up in profits. Chip and AI-linked shares led Monday's recovery, and Tesla rose 3.8% ahead of its own results later in the week.

A packed earnings calendar

Netflix and General Motors are due to report Tuesday, followed Wednesday by Tesla, Meta and IBM, with Procter & Gamble rounding out the week's marquee names on Thursday. Netflix confirmed its third-quarter results date in a release to investors, after guiding in July to revenue of $12.86 billion and diluted earnings of 82 cents a share for the period — both slightly below what analysts had been modeling at the time.

Tesla heads into Wednesday's report having already disclosed the underlying business numbers that matter most to investors. In a filing with the Securities and Exchange Commission earlier this month, the company said it delivered 486,532 vehicles in the third quarter, beating the roughly 462,000 vehicles Wall Street had expected, while also deploying 13.7 gigawatt-hours of energy storage. Deliveries were up slightly from the second quarter but still down from Tesla's record-setting third quarter a year earlier. Wall Street's own published earnings estimates for the quarter span an unusually wide range, from 30 cents to 70 cents a share, reflecting continued disagreement over how to value the company's energy and software businesses against its slowing core vehicle growth.

Meta, meanwhile, is expected to report adjusted earnings of roughly $6.76 a share on revenue near $63.35 billion when it posts results Wednesday, according to analyst consensus estimates compiled ahead of the release. Investors are watching that report closely for signs of whether the company's heavy AI infrastructure spending is starting to strain margins, the same worry that drove last week's broader technology sell-off. IBM, which also reports Wednesday, is expected to post roughly $16.8 billion in quarterly revenue and earnings near $2.87 a share, according to analyst estimates — modest growth from the same period last year that would mark the company's fourth consecutive quarter of beating Wall Street's profit expectations if the pattern holds. Procter & Gamble closes out the week Thursday with its fiscal first-quarter 2027 report; analysts expect revenue near $22.7 billion, up roughly 1.4% from a year earlier, and earnings of $1.89 a share, which would mark a decline from the year-ago period even as the company has guided to modest full-year growth.

The bigger backdrop

The rebound also came against a backdrop of a Federal Reserve that is not scheduled to meet again until October 27-28, leaving traders to parse corporate earnings rather than fresh central bank signals for direction this week. Oil prices rose alongside stocks, with crude settling higher on the day, adding a modest tailwind for energy shares even as the sector remains a smaller share of the market rally than technology.

It is at least the third time this year that doubts about artificial intelligence spending have triggered a broad market wobble, after similar bouts of selling in February and June prompted financial advisers to field a wave of client questions about whether the AI-driven rally had become overextended. Each prior dip was followed by a recovery once quarterly results showed continued revenue growth at the biggest AI spenders, a pattern this week's reports will test again.

Monday's session illustrated how tightly the broader market's mood is now tied to a handful of AI-exposed companies. Yahoo Finance's market recap noted that last week's slide and Monday's partial recovery both tracked closely with shifting sentiment on whether AI-related capital spending will keep paying off, rather than with any single piece of economic data.

The rally and retreat over the past two weeks have been unusually concentrated. A handful of the largest AI-linked companies — chipmakers, cloud providers and the social media and software giants spending heavily to build out AI infrastructure — have driven a disproportionate share of both the index gains earlier this year and the recent pullback, making single-company earnings reports this week more consequential for the broad market than they would be in a more evenly distributed rally.

What investors are watching this week

With four of the market's most closely watched companies reporting over a 48-hour window, strategists say the reaction to Tesla's and Meta's numbers Wednesday could set the tone for trading into next week's Fed meeting. A strong beat from either company, particularly on AI-related spending discipline, could extend Monday's rebound; a disappointment could reignite the kind of broad technology sell-off that erased nearly 2% from the S&P 500 just last week.

For now, Monday's modest gains left major indexes still below their levels from two weeks earlier, underscoring that this week's results, not Monday's bounce, will likely determine whether the AI-driven rally that has powered much of this year's market gains has further room to run before the Fed's own meeting later in the month adds another variable to the outlook.