Stocks Climb Ahead of Tech Earnings and a Fed Decision
U.S. stocks rose on Monday, October 26, with the Dow Jones Industrial Average up 0.28%, the S&P 500 up 0.70% and the Nasdaq Composite up 0.82%, The Wall Street Journal reported, as investors positioned ahead of tech earnings.
The advance carried into Tuesday. Reuters reported on October 27 that Wall Street rose as AI momentum held heading into key earnings and a Federal Reserve decision. The report was written by Shashwat Chauhan and Utkarsh Hathi.
The Fed decision is the larger scheduled event. The Federal Open Market Committee (FOMC), the Fed's rate-setting body, meets on Tuesday and Wednesday, October 27 and 28, and the Fed's calendar lists a press conference on October 28. The committee's last move came on September 16, when it raised the 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, the standard unit for rate changes, where one basis point equals one hundredth of a percentage point. The federal funds rate is the overnight rate banks charge each other. Think of it as the base price that other borrowing costs are built on. It feeds into the pricing of savings accounts, credit cards, adjustable-rate mortgages and corporate loans, which is why a move of this size reaches household budgets as well as trading desks.
The equity tape has been choppy in the weeks leading in. On October 21, the Dow rose 360.21 points, the S&P 500 gained 44.60 points and the Nasdaq climbed 278.04 points as SpaceX spurred what the Journal 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 rally of that size followed by a drop of that steepness in consecutive sessions tells us less about direction than about how thin the conviction is on either side of the AI trade.
The hyperscaler capital expenditure story sits underneath all of this. Capital expenditure, or capex, is spending on long-lived assets such as data centers and chips. In late July, Alphabet raised its 2026 capex forecast, and shares of Amazon, Meta and Microsoft fell in the aftermath. A few days later, Microsoft and Amazon shares climbed more than 5%, Meta rose more than 7% and Oracle jumped 6% after AI hyperscalers posted strong earnings.
The broader context here is that the market is reading the same capex number as either a warning or a validation, depending on the revenue that accompanies it.
In my view, this week's tech earnings will be judged less on whether they beat estimates than on whether management teams can tie spending to revenue growth at a pace that justifies the outlays.
The September attention on the Anthropic IPO filing, an initial public offering filing for shares sold to the public, was described by the Journal as easing anxiety about a potential AI bubble. Sentiment toward private AI valuations can shift quickly, and much of the current rally rests on expectations that have not yet been tested by reported results.
For the Fed, the question is whether the committee holds the target range at 3-3/4 to 4 percent or moves it again, and how its statement and press conference frame the path ahead. Equity futures, contracts that track where stock indexes are expected to open, were described as muted before the decision.
The quiet suggests traders were waiting for that guidance rather than acting on the index-level moves.
For savers and borrowers, the practical effect runs through short-term rates and the yields that follow them. Yield is the return an investor or saver earns on a given amount of money.
For investors, a single session's gain of under 1% in the S&P 500 says little on its own. The rate outcome and the tone of the earnings calls will carry more information than the daily tape.
