Next week could give investors clarity on whether the “Magnificent Seven” stocks can still power the market higher, or if they should instead be wary of the pitfalls of a top-heavy market now that some megacaps have faltered. Wall Street could be in for a volatile bout of trading if this past week was any indication. On Friday, the tech-heavy S & P 500 and Nasdaq Composite were on track to cap out the week with losses, down roughly 0.7% and 2%, respectively. On the other hand, the Dow Jones Industrial Average was headed for a winning week, up 0.7%. The small-cap Russell 2000 was the outperformer, gaining 2.5%. The small-cap index is now higher by more than 10% this year. .SPX 5D mountain S & P 500 Those moves came in the middle of lackluster earnings from Google parent Alphabet and Tesla that drove investors to dump tech stocks in favor of more cyclical assets. Alphabet shares dropped about 6% this week. Tesla shares are down more than 7%. However, the bulk of Magnificent Seven results is set for release in the week ahead. Microsoft reports Tuesday, while Facebook parent Meta Platforms releases its latest quarterly results on Wednesday. Apple and Amazon are expected to post earnings Thursday. Nvidia reports in late August. The reports could clarify what is in store for the stock market benchmarks that are heavily weighted toward technology, at a time when investors fear that the artificial intelligence trade has gotten ahead of itself. For investors, more disappointing results from the megacap stocks could mean further downside for the broader market. “The number one question being asked by clients is: is this a correction or the start of something bigger,” Strategas Securities’ Ryan Grabinski wrote in a Thursday note referring to this week’s pullback. “While my first instinct is to say that it is a normal correction, I am beginning to see some signs of concern. First off, earnings estimates for 2H’24 are seeing revisions lower with 3Q coming down 1.4% since July 1st and 4Q coming down 0.2%.” “The bigger concern however is the waning ‘AI Enthusiasm,'” Grabinksi added. “The circular capex cycle for the largest, most liquid companies does not appear to be ending just yet, but investors are now questioning what the [return on investment] will be in the future.” As it is, all seven of the Magnificent Seven companies are closing out this week with losses. The fading of momentum Even as the tech sell-off has investors concerned about waning momentum, other investors say the megacap tech stocks continue to look attractive. John Belton, portfolio manager at Gabelli Fund, said it is important to view the Magnificent Seven on a case by case basis. In fact, he noted that Tesla and Alphabet’s earnings results this week should be differentiated, as the former was a case of poor fundamentals, while the latter was caught up in a market rotation away from tech, he said. “I do think bad fundamentals in this market environment are going to get really punished. Good fundamentals — I think the bar is just higher right now for a lot of these tech companies in this earning season,” Belton said. “And that’s a dynamic that is not necessarily going to last for a long time, but that’s sort of the environment we’re in right now.” For the moment, Belton said he is finding opportunities in other parts of the market such as health care, industrials and financials. But he still remains optimistic on the long-term outlook for AI. “A lot of these companies, the fundamentals are just still really good,” Belton said. “And I think so long as the fundamentals remain good, and [the] earnings growth outlook is still positive, and earnings estimate revisions remain in a positive direction, I don’t think the stocks are unreasonably priced.” FOMC meeting, July jobs report Elsewhere, investors will also be reviewing the latest Federal Reserve interest rate decision set for release on Wednesday. Wall Street is anticipating the central bank will keep its benchmark lending rate at 5.25% to 5.50%, but investors will look for more clarity around the interest rate outlook for the balance of the year. Markets were last pricing in a certain rate cut in September, according to the CME FedWatch Tool . Traders will also get insight into the labor market next week, with the release of the July jobs report on Friday. Investors have been carefully watching the labor market for signs of enough cooling to justify lower rates, but not so much weakening that the economy seems headed for a recession. Economists polled by FactSet anticipate the U.S. economy to have added 177,500 jobs last month, down from 206,000 the previous month. The unemployment rate is expected to have held steady at 4.1%. Week ahead calendar All times ET. Monday, July 29 10:30 a.m. Dallas Fed Index (July) Earnings: On Semiconductor , McDonald’s Tuesday, July 30 9 a.m. FHFA Home Price Index (May) 9 a.m. S & P/Case-Shiller Home Price Indices (May) 10 a.m. Consumer Confidence (July) 10 a.m. JOLTS Job Openings (June) Earnings: Advanced Micro Devices , Live Nation Entertainment , Public Storage , Electronic Arts , Starbucks , Match Group , Microsoft , First Solar , Extra Space Storage , Caesars Entertainment , Corning , Howmet Aerospace , Procter & Gamble , Pfizer , Merck & Co. , Stanley Black & Decker , PayPal Wednesday, July 31 8:15 a.m. ADP Employment Survey (July) 8:30 a.m. Employment Cost Index (ECI) Civilian Workers (Q2) 9:45 a.m. Chicago PMI (July) 10 a.m. Pending Home Sales Index (June) 2 p.m. FOMC Meeting 2 p.m. Fed Funds Target Upper Bound Earnings: MGM Resorts International , Allstate , Albemarle , Lam Research , eBay , Qualcomm , Western Digital , Meta Platforms , Etsy , Norwegian Cruise Line Holdings , Hess , Boeing , T-Mobile , Marriott International , GE Healthcare Technologies , Generac Holdings , Kraft Heinz , Mastercard , Ingersoll Rand Thursday, Aug. 1 8:30 a.m. Continuing Jobless Claims (07/20) 8:30 a.m. Initial Claims (07/27) 8:30 a.m. Unit Labor Costs preliminary (Q2) 8:30 a.m. Productivity SAAR preliminary (Q2) 9:45 a.m. Markit PMI Manufacturing (July) 10 a.m. Construction Spending (June) 10 a.m. ISM Manufacturing (July) Earnings: Apple , Clorox , Intel , Amazon.com , Booking Holdings , Motorola Solutions , Microchip Technology , Kellanova , Hershey , Moderna , Air Products and Chemicals Friday, Aug. 2 8:30 a.m. Jobs Report (July) 10 a.m. Durable Orders (June) 10 a.m. Factory Orders (June) Earnings: Exxon Mobil , Chevron