Stocks Edge Higher as Investors Wait on the Fed and Big Tech Earnings
U.S. stocks rose on Monday, October 26. The Dow Jones Industrial Average gained 0.28%, the S&P 500 rose 0.70% and the Nasdaq Composite, which is packed with technology companies, climbed 0.82%. The Wall Street Journal reported that investors were positioning themselves ahead of tech earnings, the profit reports that companies publish.
The gains continued on Tuesday. Reuters reported on October 27 that Wall Street rose as AI momentum held, with key earnings and a Federal Reserve decision still ahead. The report was written by Shashwat Chauhan and Utkarsh Hathi.
The Fed decision is the bigger scheduled event. The Federal Open Market Committee (FOMC), the group that sets interest rates for the Fed, meets on Tuesday and Wednesday, October 27 and 28. The Fed's calendar lists a press conference on October 28.
The committee's last move came on September 16. It raised its target range for the federal funds rate by 1/4 percentage point, to 3-3/4 to 4 percent. A quarter point is 25 basis points. A basis point is one hundredth of a percentage point, and it is the standard unit for rate changes.
The federal funds rate is the overnight rate banks charge each other. Think of it as the base price that other rates are built on. It feeds into the rates on savings accounts, credit cards, adjustable-rate mortgages and business loans. That is why a change this size reaches household budgets as well as trading desks.
The stock market has been bumpy in the weeks before the meeting. On October 21, the Dow rose 360.21 points, the S&P 500 gained 44.60 points and the Nasdaq climbed 278.04 points. The Journal said SpaceX sparked what it called an AI relief rally. The following Thursday, the Nasdaq posted its steepest daily drop since early June amid high-profile earnings reports.
In my view, a big rally followed by a sharp drop in consecutive sessions says less about where prices are heading than about how unsure investors are. Neither side of the AI trade seems fully convinced.
Underneath all of this is a question about spending. Capital expenditure, or capex, is money spent on long-lived assets such as data centers and computer chips. Think of it like a delivery company buying a fleet of trucks. The spending is up front, and the payoff comes over years. In late July, Alphabet raised its 2026 capex forecast, and shares of Amazon, Meta and Microsoft fell afterward. A few days later, Microsoft and Amazon shares climbed more than 5%, Meta rose more than 7% and Oracle jumped 6% after large AI-focused companies posted strong earnings.
The same spending number led to opposite reactions in those two weeks. The broader context here is that investors seem to read a big capex figure as a warning or as a sign of success, depending on the sales that come with it.
In my view, this week's tech earnings will be judged less on whether companies beat expectations and more on whether their leaders can show that spending is turning into revenue, and fast enough to justify the cost. The Journal said in September that news of an Anthropic IPO filing eased worries about an AI bubble. That shift in mood shows how quickly feelings about private AI companies can change. Much of the current rally still depends on hopes that have not yet been tested by reported results.
For the Fed, the question is whether the committee keeps the target range at 3-3/4 to 4 percent or changes it again. Its statement and press conference will matter as much as the decision itself. Stock futures, which are bets on where the market will open, were described as muted before the decision. That suggests traders were waiting for guidance from the Fed rather than reacting to the day's moves.
For savers and borrowers, the effect runs mainly through short-term rates and the yields that follow them. A yield is the return an investment pays. For investors, a gain of under 1% in the S&P 500 in one session tells you little on its own. The Fed's decision and the tone of the earnings calls will likely tell you more than the daily market swings.
