AI Still Sizzles Awaiting Fed, Alphabet, Microsoft
Published as of: October 28, 2026, 9:13 a.m. ET
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(Wednesday market open) A Federal Reserve rate decision usually takes top billing, but not necessarily today. Microsoft (MSFT) and Alphabet (GOOGL) report after the close and the Fed's not expected to set off any fireworks this afternoon. Major indexes edged higher early despite rising oil on headlines indicating the U.S. might attack Iran again after next week's election, but trading could lack direction ahead of today's news events.
Odds of a hike at 2 p.m. ET are just 9%, according to the CME FedWatch Tool. Policymakers hinted recently that although inflation is high, there's no urgent need to tighten yet. One question is whether Chairman Kevin Warsh will hint that recent data suggests the need for more hikes, or as he put it in his last post-meeting remarks, removing "a dose of accommodation." In September, policymakers voted 12-0 to hike, and today's vote could hint at the Fed's mood approaching year-end. Watch for any dissents.
On Tuesday, major indexes gained for a second straight session as risk-on sentiment returned and investors flocked to growth sectors including tech and consumer discretionary. Hopes of fresh progress toward Middle East diplomacy and steady bond yields also helped stocks. Along with the Fed and earnings, today features an Oracle (ORCL) investor meeting, putting more spotlight on AI spending and higher borrowing costs to fund it.
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Three things to watch
- Big clouds approach: Last time Microsoft and Alphabet reported, Alphabet fell sharply after it missed consensus earnings per share in the second quarter and raised its 2026 capital expenditures forecast to as high as $205 billion. That could make capex an important metric to watch, especially for 2027. On a positive note, Alphabet's Google Cloud revenue surged 82% annually last time, setting up a tough sequential comparison today, though many analysts expect even better annual growth of 90% or more. Microsoft shares jumped 8% initially after earnings in July as the company forecast steady capital expenditures. Azure cloud growth, a key metric, rose 43% annually, up from 40% the quarter before. Microsoft projected 45% constant-currency Azure growth for the quarter it reports today. "There's been a lackluster post-earnings reaction in recent quarters, but if hyperscalers can surprise on AI monetization or show accelerated AI adoption for their products, it could help quell investor fears around spending and potentially result in a favorable post-earnings move," said Nathan Peterson, director of derivatives research and strategy at the Schwab Center for Financial Research (SCFR).
- Data due a day late for Fed: Thursday's Personal Consumption Expenditures (PCE) prices and first government estimate of third quarter gross domestic product (GDP) arrive a day too late for the Fed decision. But PCE may not be a dollar short, with no let-up seen in price growth. Analysts expect monthly headline PCE of 0.5%, and core PCE, excluding food and energy, at 0.3%, up from 0.3% and 0.2% in August. On an annual basis, consensus is for 3.6% growth in headline PCE and 3.1% in core. The government's estimate for GDP is expected to be 3%, up from 2.2% in the second quarter, according to Briefing.com. That's solid, and anything higher has a chance of pushing up Treasury yields. The benchmark 10-year note yield is down about 35 basis points from recent highs as rate hike odds fall, but solid economic data tends to support higher yields by underpinning inflation fears, and new home sales and consumer confidence both topped expectations yesterday. Treasuries also move on auction demand. A $70 billion 5-year note auction yesterday drew lackluster demand following weak sales at a 2-year note auction Monday. A 7-year note auction is tomorrow.
- Under-the-radar items to watch with GDP: Tomorrow's GDP data is the first estimate and could change, meaning investors might not want to place too much importance on the headline. Personal consumption expenditures, which climbed a solid 3.8% in the second quarter, helped propel growth then, while the GDP deflator, which measures general price inflation for domestically produced goods and services, rose a dramatic 6.1%. Both measures are likely to be watched tomorrow for signs of any change, with spending under a microscope for evidence that it held up despite inflation pressure. Another item to check is non-residential fixed investment, the line item in GDP that reflects business capital spending. And imports and exports could give hints at AI demand. "I'll also be watching the import-export relationship, because a lot of what is being purchased for the build-out in AI are imports," said Liz Ann Sonders, chief investment strategist at SCFR, in a recent podcast. Heavy imports tend to weigh on GDP growth by widening the U.S. trade deficit.
On the move
- Chip and AI-related stocks climbed the ladder early, extending gains after South Korean memory chipmaker SK Hynix (SKHY) reported firmer-than-expected quarterly revenue that rose 327.9% year-over-year. The company expects memory demand to exceed supply through 2030. Shares rose almost 8%.
- Shares of SK Hynix's memory competitors rose in its wake, including Sandisk (SNDK) and Micron (MU) up 4% or more. Sandisk reports Thursday. The PHLX Semiconductor Index (SOX) is up 6.5% this week after falling 3.2% last week.
- Shares of so-called neoclouds CoreWeave (CRWV) and Nebius (NBIS) both climbed 3% in the early going after sagging earlier this week on worries about access to capital. Other firms benefitting from the AI buildout also rose today, including Bloom Energy (BE), Hewlett-Packard Enterprise (HPE), and ASML (ASML).
- ServiceNow (NOW) fell 2% early ahead of earnings later. Its results could have implications for the software sector.
- Nucor (NUE) rose another 5% early on strong earnings as the company reported "booming" steel demand. Nucor gained 5% yesterday as well.
- F5 (FFIV), a technology firm, fell 7% early on a downgrade to neutral from overweight by Piper Sandler.
- Enphase Energy (ENPH) tumbled 18% this morning after the company missed quarterly consensus and guided well below consensus.
- Vertiv (VRT) jumped nearly 16% early after the data center infrastructure provider reported better-than-expected earnings and raised guidance. The company said the infrastructure build-out is accelerating and revenue rose more than 61% year over year.
- Boston Scientific (BSX) crumbled more than 11% early as it cut full-year guidance following an August cyberattack that disrupted operations, Barron's reported.
- Etsy (ETSY), an e-commerce company, rose 6% in the early going after the firm reported a 10.9% year-over-year quarterly rise in revenue.
- Wendy's (WEN) sizzled to 15% early gains as the Wall Street Journal reported that Trian Fund Management offered to acquire the fast-food giant for $1.4 billion.
- JetBlue (JBLU) surged 19% Tuesday as the company projected fourth quarter margin expansion, CNBC reported.
- Boeing (BA) plunged 10.7% Tuesday after suffering a wider-than-expected quarterly loss despite better-than-expected revenue. Commercial revenue fell year-over-year. Space, defense, and security performed well but Boeing continues to spend heavily on new airplane production, hurting profits.
More insights from Schwab
Election tracker: Democrats are poised to capture the House majority, according to the latest Schwab Washington: What to Watch Now. "The Senate remains a toss-up, but Democrats have a real shot at the majority," wrote Michael Townsend, managing director, legislative and regulatory affairs at Schwab. Iowa could be a bellwether, and outcomes might not be clear by November 4.
" id="body_disclosure--media_disclosure--542896" >Election tracker: Democrats are poised to capture the House majority, according to the latest Schwab Washington: What to Watch Now. "The Senate remains a toss-up, but Democrats have a real shot at the majority," wrote Michael Townsend, managing director, legislative and regulatory affairs at Schwab. Iowa could be a bellwether, and outcomes might not be clear by November 4.
Health care earnings ahead: With major pharma and biotech earnings up next, investors eye progress on new drugs, sales of existing ones, and how companies will handle patent expirations threatening revenue, Schwab reports in its health care earnings preview. Health care's defensive appeal has attracted investors lately, but risks remain in the sector.
Inflation (not just energy) gets hotter: The Fed isn't likely to raise rates today, but prices of core consumer products, excluding energy, just keep accelerating. Services prices accounted for 38% of the CPI's overall monthly rise in September. Find out more about what's driving this and other inflationary trends in Schwab's latest look at markets and the economy.
Chart of the day
Data source: Bloomberg, Nasdaq, S&P Dow Jones Indices. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
With Microsoft and Alphabet reporting today and Amazon tomorrow, Magnificent Seven earnings come at a time when the seven firms together ($BM7N—candlesticks) trail both the S&P 500 Index (SPX--purple line) and the Nasdaq-100® (NDX—blue line) year to date by quite a bit.
The week ahead
October 29: Third quarter GDP—first estimate, September PCE prices, September core PCE prices, ECB rate decision, and expected earnings from Amazon (AMZN), Eli Lilly (LLY), Intel (INTC), Sandisk (SNDK), Gilead Sciences (GILD), Mastercard (MA), Merck (MRK), Caterpillar (CAT), Shell (SHEL), Anheuser-Busch Inbev (BUD), Bristol-Myers Squibb (BMY), Altria (MO), Stryker (SYK), Starbucks (SBUX), and Mondelez (MDLZ).
October 30: BoJ rate decision and expected earnings from ExxonMobil (XOM), AbbVie (ABBV), Chevron (CVX), BP (BP), Sanofi (SNY), and General Dynamics (GD).
November 2: September construction spending, October ISM Manufacturing PMI®, and expected earnings from Apple (AAPL), Palantir (PLTR), Marriott International (MAR), Entergy (ETR), Idexx Labs (IDXX), Estee Lauder (EL), Vertex Pharmaceuticals (VRTX), Diamondback Energy (FANG), On Semiconductor (ON), and Roku (ROKU).
November 3: September factory orders and expected earnings from Advanced Micro Devices (AMD), Shopify (SHOP), Pfizer (PFE), Amgen (AMGN), Eaton (ETN), Marathon Petroleum (MPC), Arista Networks (ANET), Booking Holdings (BKNG), Block (XYZ), and American International Group (AIG).
November 4: October ISM Services PMI® and expected earnings from McDonald's (MCD), Uber (UBER), Novo Nordisk (NVO), CVS Health (CVS), Datadog (DDOG), Arm Holdings (ARM), Qualcomm (QCOM), McKesson (MCK), AppLovin (APP), Motorola (MSI), DoorDash (DASH), and Allstate (ALL).