US stocks were heading toward a split open on Wednesday, October 28, as investors awaited the Fed decision and earnings from Microsoft and Alphabet. Nasdaq-100 futures rose 0.3% to 0.5% , while Dow futures fell 0.2% to 0.3%, following a chip-led rally powered by Broadcom’s $63 billion financing arrangement tied to Anthropic.
Key takeaways
CME FedWatch put the probability of unchanged interest rates at roughly 92%.
Microsoft and Alphabet’s earnings will put AI demand and spending in focus.
Broadcom’s financing arrangement lifted its shares 4% on Tuesday.
S&P 500 futures were near flat early Wednesday. All three major averages had finished Tuesday higher, with the Nasdaq Composite gaining 1.2% as chip stocks advanced and lower oil prices supported equities.
US stocks await the Fed decision
The Federal Reserve is widely expected to maintain its target interest-rate range at 3.75% to 4% . CME’s FedWatch tool assigned roughly a 92% probability to no change at the conclusion of the central bank’s two-day meeting.
At its September meeting, the Fed increased rates by a quarter of a percentage point. Inflation readings remain elevated, and some investors expect Fed Chairman Kevin Warsh to signal further increases at future meetings.
For US stocks, attention around the Fed decision also extends to Warsh’s press conference, where investors will listen for a hawkish tone. The rate announcement is scheduled for 2 p.m. ET on Wednesday.
Microsoft and Alphabet earnings put AI spending in focus
Microsoft and Alphabet report after the market closes on Wednesday, with investors looking for updates on AI demand and spending plans. Both companies are leaders in cloud computing.
The reports follow several difficult weeks for technology stocks exposed to the AI buildout, as investors have questioned how that expansion is being financed.
Following Microsoft’s results, reports also surfaced that the company had extended buyout offers to up to 60,000 employees , as it looks to simplify operations while expanding its AI infrastructure.
Broadcom’s $63 billion arrangement lifts chip stocks
According to Broadcom, a consortium of banks would supply $63 billion in financing to purchase its chips and networking equipment, which would then be leased to Anthropic, the firm behind Claude. The arrangement is intended to support the expansion of AI computing capacity.
Broadcom shares gained 4% on Tuesday after the news. Advanced Micro Devices climbed 5.5% , while Micron Technology advanced 2.8%, helping drive the Nasdaq Composite’s rise.
The financing news came as investors were questioning funding for the broader AI buildout. It gave chip stocks a lift ahead of the demand and spending updates due from Microsoft and Alphabet.
Asian markets rise as Wilson sees correction nearing its end
Asian stock markets posted gains on Wednesday, led by South Korea’s Kospi, which rose 6.63% to 6,012.44 . Japan’s Nikkei 225 closed 1.08% higher at 63,954.19, and mainland China’s CSI 300 gained 0.85% to 4,083.87.
Australia’s S&P/ASX 200 finished flat at 8,847.30. Japan’s Topix slipped 0.14% to 3,991.71, while South Korea’s smaller-company Kosdaq advanced 3.69% to 771.28.
Morgan Stanley ’s chief US equity strategist, Mike Wilson, said on Tuesday that most of the market correction was already over. He described the market as having been in correction mode for four or five months.
Lower oil prices also supported Tuesday’s US stock gains. Oil prices dropped after news broke that Iran’s Supreme Leader Mojtaba Khamenei held talks with security official Mohsen Rezaei about terms for ending the war with the US.
Beyond Microsoft and Alphabet, the week’s earnings calendar includes Ford, GE Vernova, T-Mobile US, eBay, Chipotle Mexican Grill and ServiceNow.
Article produced with the assistance of artificial intelligence and reviewed by the editorial team.
