U.S. Stocks Unsteady Ahead of Fed’s Rate Decision After Mixed Earnings

U.S. stocks showed hesitation

U.S. stocks showed hesitation as investors awaited the Federal Reserve’s interest rate decision, prompted by a combination of Microsoft and Alphabet reporting mixed earnings. At 9:36 ET, the Dow Jones Industrial Average rose slightly, while the S&P 500 declined by 0.2% and the NASDAQ Composite dropped by 0.4%. Microsoft shares fell 3.1% despite beating expectations, as it reported slower growth due to increased focus on artificial intelligence capabilities. In contrast, Google’s parent company, Alphabet Inc., saw a 6.5% rise in its shares after surpassing expectations with a rebound in advertising revenue and cloud services. Big tech companies like Meta Platforms, Inc. are also set to report earnings soon.

Fed’s interest rate increases

Investors’ hopes that the Fed’s interest rate increases may be nearing an end have driven tech stocks higher, with the Nasdaq up 34% for the year, partly fueled by enthusiasm over AI advancements. The Federal Reserve will announce its decision at 14:00 ET today, with Chair Jerome Powell holding a press conference afterward. Market participants will be closely monitoring Powell’s statements regarding the Fed’s outlook for the coming months and into the fall. While a quarter of a percentage point increase is largely expected, uncertainty surrounds whether further rate hikes will occur later this year. The upcoming annual meeting in Jackson Hole, Wyo., in August will be the next major event for the Fed.

In other stock movements, Boeing Company posted a narrower-than-expected loss, leading to a 5.8% increase in its shares, while Coca-Cola Company dipped 0.4% after raising its forecasts for annual revenue and profit. Oil prices saw a decline, with Crude Oil WTI Futures down 0.7% to $79.03 and Brent Oil Futures down 0.6% to $82.77 a barrel. Gold Futures, on the other hand, rose 0.2% to $1,968.

As the Fed’s decision looms, market participants are closely monitoring earnings reports and economic indicators for potential shifts in the market and the Fed’s monetary policy direction.

Summary

• U.S. stocks show mixed performance ahead of the Federal Reserve’s interest rate decision.
• Microsoft shares fall 3.1% despite beating expectations due to slower growth in AI capabilities.
• Alphabet’s stock rises 6.5% after beating expectations with increased ad revenue and cloud services.
• Meta Platforms expected to report earnings later in the day.
• Investors have been driving tech stocks higher, fueled by hope of the Fed’s easing interest rate increases and excitement over AI.
• The Federal Reserve’s decision and Chair Jerome Powell’s press conference will be closely watched by investors.
• Futures traders expect a quarter-point rate increase today but are uncertain about further rate hikes this year.
• Boeing posts a narrower-than-expected loss, and Coca-Cola raises its forecasts for annual revenue and profit.
• Oil prices decline, while gold prices rise slightly.