U.S. Stock Rally Faces Uncertainty Amid AI Enthusiasm and Fed Decisions

The U.S. stock market rally continues amid mixed corporate earnings and doubts about future Fed interest rate cuts. With AI investments raising stock valuations to levels not seen since the tech bubble, investors are cautious. The outcome of upcoming earnings reports and economic data could impact future market gains.

Despite the resilient rally in U.S. stocks, investor anxiety looms as a busy week of corporate earnings unfolds. Concerns mount over the sustainability of the artificial intelligence trade and the Federal Reserve's approach to interest rate reductions.

The S&P 500 index climbed by 2.3% in October, marking its sixth consecutive month of gains. However, the market faces valuation concerns, with the forward price-to-earnings multiple hitting heights last seen during the dot-com bubble.

As AI-driven enthusiasm continues to push the market, doubts about the sustainability of such growth persist. With 83% of reporting S&P 500 companies surpassing earnings expectations, investors look to upcoming earnings and alternative economic data amid a U.S. government shutdown to gauge the market's next move.

(With inputs from agencies.)