Here is Schwab's early look at the markets for Monday, October 19:

With data taking a back seat, focus turns squarely toward earnings ahead of reports this week from Netflix, IBM, Tesla, and Meta Platforms. It all comes after a rough ride on Wall Street Friday that saw volatility spike.

Tech earnings loom at an auspicious time considering market conditions. By late Friday, the PHLX Semiconductor Index (SOX) was down more than 15% in just over a week, testing lows last seen in mid-September.

Concerns mounted all last week over rising debt levels for AI stocks as companies across the sector now face lofty interest costs. Data center builder CoreWeave became the face of that trade, falling another 12% Friday after a 15% drop Wednesday.

Debt worries permeated well beyond one company, however. Oracle is another AI and cloud firm down dramatically over recent months for similar reasons. Shares fell more than 4% Friday.

Other AI-related firms deep in the red Friday and much of last week included Lam Research, Applied Materials, Advanced Micro Devices, and Micron. Worst hit on Friday included Super Micro Computer, Snowflake, Sandisk, and Arm Holdings.

Tech shares began wobbling earlier this month on reports of lower-than-expected revenue from OpenAI. Selling worsened last week as inflation data triggered debt worries and media reported advances in cheaper memory chip competition from China.

The earnings calendar could distract from the AI story, but not necessarily with today's light schedule. Things pick up tomorrow as GE Aerospace, 3M, General Motors, Netflix and other companies less tied to AI post results.

With 10% of companies reporting, about 84% surpassed analysts' earnings consensus, FactSet said. It sees S&P 500 annual third quarter earnings growth of 29%. However, big banks reporting last week failed to impress market participants, judging by the stock market reaction. Regional banks pick up the baton this week.

Last week's U.S. inflation data raised concerns across the market. Even so, Treasury yields retreated to 5.08% for the 10-year note by the end of the week, down 25 basis points in two days. This may not be a good thing, as it could reflect investors taking more defensive positions amid fears of economic lethargy.

"Typically, elevated inflation would push yields higher," said Cooper Howard, director of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). "However, concerns that the AI buildout could weigh on economic growth have prompted something of a 'flight-to-safety' move. With markets balancing these competing narratives, the potential economic impact of AI investment and persistent inflation, rate volatility is likely to continue."

Defensiveness showed up beyond bonds last week as participants rotated into less AI-exposed sectors. Broadening breadth can be healthy, but it should be taken in context because tech growth is what pushed indexes to record highs recently. Without tech's robust participation, new index highs could be a challenge.

Volatility came roaring back Friday and sent the Cboe Volatility Index (VIX) above 20 for the first time since late July. Typically, 20 is seen as an important marker signaling uncertainty and bearishness. The broadening tech sell off caused options traders to seek hedges.

As earnings roll out, it's clear again that investors have high expectations and companies that can't step over their lofty bars might get punished on Wall Street.

"Muted-to-negative stock price reactions to solid earnings results show that the bar is getting higher this reporting cycle for companies to deliver," said Alexandra Semenova, financial insights strategist at SCFR. "Investors are looking beyond headline beats to guidance."

The next Federal Reserve rate decision comes a week from Wednesday, meaning the Fed enters its "quiet" period this week. Bloomberg's measure of "Fedspeak" keeps getting more hawkish and is back to levels last seen in March 2023.

As of late Friday, however, chances of a Fed rate hike on October 28 fell to 17% from as high as 45% earlier in the week after the hot CPI report, according to the CME FedWatch Tool. For the full year, odds of at least one more rate hike remain near 85%. But the way futures trade, it appears most participants expect the Fed to hold off this month and then come back in December to crank the handle again.

Housing dominates data early this week, notably tomorrow's September housing starts and building permits. Housing numbers  recently have been almost all negative, hurt by high mortgage rates and prices that remain lofty due to low supplies.

In trading Friday, major indexes plunged. Damage was more contained in non-AI sectors, with the S&P 500 Equal Weight Index--which weighs all components equally--down about half as much as the S&P 500 Index.

The tech-focused Nasdaq Composite suffered its worst week since June amid rotation out of AI, but the Dow Jones Industrial Average, with more exposure to energy, financials, and staples, advanced last week.

Six of 11 S&P 500 sectors avoided the red Friday despite a worse than 1% index drop. Energy led as crude edged up  following Ukrainian strikes on Russian refineries and Iranian attacks on oil shipping. U.S crude bounced 2.6% Friday to $99 per barrel, about a one-month high.

Other leading sectors Friday were mainly defensive, including utilities and staples. This continued a trend from earlier in the week and reinforced ideas that investors have embraced a more risk-off outlook. Some of this could be pre-earnings jitters, with info tech and communication services each down more than 2% ahead of this week's reports from Meta and IBM.

Technically, there was bearish news as the S&P 500 closed Friday below the 50-day moving average of 7,707. This line has been a firm support point for almost three months, though it's been tested several times. The SPX hasn't traded regularly below the 50-day since July. It would probably take a few more closes beneath it to have a wider technical impact, but it's worth watching.

Among individual movers Friday beyond the wounded AI names, Tesla initially popped 3% but then fell 2% after revealing its redesigned Roadster, a two-seat sports car featuring SpaceX-developed compressed gas thrusters. Tesla calls it the world's first flying car.

Crypto-related stocks sank as bitcoin fell more than 1.6%, now down almost 8% from recent highs.  Strategy was hit hardest, down more than 9% on news that MSCI, the global provider of financial market indexes, is proceeding with a decision that would lead to the exclusion of Strategy from its Global Investable Market Indexes (GIMI), Barron's reported. Strategy is lobbying against the change, which could be reversed but is scheduled to take effect December 1.

Alcoa rose about 2.5% after earnings topped consensus, driven partly by improved alumina production, up 11% sequentially.

Apple rose slightly but finished well off highs after AppleInsider reported that iPhone Duo sold out moments after pre-orders began.

Defense stocks—the military defense kind—climbed Friday as global tensions worsened. Northrop Grumman and Lockheed Martin advanced more than 3.6%. Both report this week.

Semtech fell 5% even though it said at an analyst day Thursday it expects data center revenue to double both of the coming fiscal years. The company is a semiconductor and cloud connectivity service provider.

The Dow Jones Industrial Average® ($DJI) dropped 175.28 points (-0.34%) Friday to 52,002.41; the S&P 500 Index ($SPX) shed 84.62 points (-1.09%) to 7,659.44, and the Nasdaq Composite® ($COMP) plunged 572.99 points (-2.15%) to 26,140.03.

For the week, the SPX fell 1.95%,  the $DJI rose 0.67%, and the Nasdaq lost 4.48%.