US stocks may face the scariest week of the year so far!

The record-breaking rebound in the US stock market may face the most challenging period of 2024 so far next week, with a series of dazzling risk factors waiting to be revealed.

The earnings reports of large tech companies, fluctuations in the US debt market, Friday's non-farm payroll data, and the final sprint of a fierce presidential election will all have significant impacts on the market.

Tech stocks face earnings test

Eric Beiley, Managing Director of Steward Partners, said, " This is an important earnings week, and the performance of the 'Big Seven' is crucial. We need to see strong performances from these companies because stock valuations are very high."

Although the rebound at the beginning of the year expanded to mid-cap and even small-cap stocks, these stocks may benefit from the Fed's shift to rate cuts, but mega-cap tech stocks seem to be back in favor.

According to FactSet data, the small-cap Russell 2000 index fell by 3% in the week ending last Friday, while the information technology sector of the S&P 500 rose by 0.2%.

Keith Lerner, Co-Chief Investment Officer of Truist Advisory Services, said, "Large-cap tech stocks could bring surprises, or they could be a trap."

If these are not enough to increase market uncertainty, Apple (AAPL) and Amazon (AMZN) will report their third-quarter earnings around Halloween, which is typically one of the most volatile days of the year as it falls right in the typical end-of-month portfolio rebalancing period.

Non-farm payroll data in focus

Federal Reserve officials still hope that the labor market can maintain a delicate balance, neither cooling excessively nor overheating, to avoid reigniting inflation concerns.

The October non-farm payroll report released on Friday will refocus this debate, although Wall Street analysts warn that the data may be distorted due to the impact of Boeing's (BA) strike workers and the recent two strong hurricanes.

The unexpectedly strong job data in September helped alleviate concerns about a sharp economic downturn. Investors are concerned that while higher wages are generally supportive, they could also trigger inflation, hindering Fed rate cuts.

Lerner from Truist said, "A significantly negative or positive reading will have a major impact. I think the employment report will be the only important thing—then it's the election."

Election anxiety

Despite the strong performance of the US economy in 2024, not all households have recovered the same financial resilience from the COVID-19 pandemic.

Since September, there has been a significant sell-off in the US bond market attributed to the resilience of the economy, forcing the bond market to abandon previous expectations of Fed rate cuts. Concerns about the upcoming election are another increasingly important factor.

Wall Street has little hope that Harris or Trump will address the massive US government deficit issue. Several billionaire investors, including Paul Tudor Jones, have recently warned about the burden of US debt and the potential impact of Trump's tariffs and tax policies Currently, the tension of the election is mainly focused on the U.S. bond and gold markets, according to Mullarkey from SLC Management. Although he is not a "gold bug," he mentioned that the behavior of global central banks increasing gold purchases has helped drive gold prices to new highs in October.

Mullarkey stated that Trump's campaign not only threatens to impose tariffs on imports but also to punish countries that abandon the U.S. dollar. "Gold is a widely recognized alternative or hedging tool against tail risks," he said. If the election results bring more tension, the value of gold may further rise