Fed holds rates in split vote as Alphabet slides and Microsoft gains on earnings
Fed held rates at 3.75%-4.00% in a split vote; GOOGL sank and MSFT rose on earnings, leaving US futures mixed to lower ahead of Amazon's report.
US stock index futures pointed to a mixed, cautious open Thursday as traders weighed a Federal Reserve decision against a split verdict from two of the “Magnificent Seven.” Nasdaq 100 futures were the weak spot, down roughly 0.9%–1.1%, while S&P 500 futures slipped about 0.2%–0.3% and Dow futures were closer to flat, according to reports cited by Invezz and FXStreet. Wednesday’s regular session had closed higher for a third straight day, with the S&P 500 finishing up 0.3% at 7,743.98.
The overnight driver was the Federal Reserve. The FOMC voted 10-2 on Wednesday to hold its benchmark rate at 3.75%–4.00%, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of a quarter-point hike, according to CNBC and the Fed’s own implementation note. Chair Kevin Warsh’s press conference left traders pricing meaningfully higher odds of a December hike — Invezz and other outlets cited CME FedWatch probabilities in the 85%-plus range — and the 10-year Treasury yield traded close to 5%, briefly topping that level before easing slightly, per CNBC and Invezz. The dollar slipped against the euro during the press conference as investors judged Warsh’s guidance less hawkish than the dissents implied, Babypips reported.
Big Tech earnings added to the overnight churn. Alphabet (GOOGL) shares fell roughly 10% in after-hours and premarket trading after third-quarter revenue of $127.6 billion came in just under the roughly $128.2 billion analysts expected and free cash flow swung to a negative figure of about $9.1 billion, even as Google Cloud revenue more than doubled to $30.71 billion, per CNBC and FXStreet. Microsoft (MSFT) shares moved the other way, rising in a range reported between roughly 3% and 4% after hours as free-cash-flow growth, though down 27% year over year to about $18.6 billion, still beat Wall Street’s estimate, CNBC and FXStreet reported. That split followed Meta Platforms’ drop of about 3% earlier in the week after it beat on revenue but raised its AI capital-spending outlook to $135–145 billion. In Asia, Japan’s Nikkei 225 climbed about 1.1% to 64,659.47, while Hong Kong’s Hang Seng fell about 0.6% to 22,958.65 and the Shanghai Composite lost about 0.8% to 3,651.43, per AP-syndicated coverage. Europe opened firmer, with Germany’s DAX up about 0.8%, France’s CAC 40 up about 1%, and the UK’s FTSE 100 up about 0.5% in early trading, according to a BNN Bloomberg/AP report.
What to watch today
- Amazon.com (AMZN) reports third-quarter results after the close, with investors likely to focus on AWS cloud growth and capital-spending plans after this week’s divergent Alphabet and Microsoft reactions. (CNBC)
- Weekly initial jobless claims are due at 8:30 a.m. ET, the regular Thursday Labor Department release. (Dept. of Labor weekly schedule)
- Treasury yields remain in focus after the 10-year traded close to 5% following the Fed’s hold; futures markets were pricing high odds of a December rate move after Chair Kevin Warsh’s press conference. (CNBC / Invezz)
- Continued reaction to Wednesday’s split FOMC vote (10-2, Cook and Hammack dissenting for a hike) as investors parse officials’ comments through the session. (Federal Reserve / CNBC)
- Follow-through trading in Alphabet (GOOGL) and Microsoft (MSFT) shares after their divergent after-hours moves on Q3 results. (FXStreet)
Watchlist earnings today: Amazon.com, Inc. (AMZN, after the close)