Equity markets continue to make new highs, with momentum driven by AI optimism, record highs in major indices, and anticipation of both Federal Reserve rate action and key tech earnings releases today. Today is a pivotal day for markets, with two major catalysts, Fed decision and Big tech earnings.
The FOMC is widely expected to announce a 25-basis-point rate cut (to 4.50%-4.75%), marking the first reduction since July. All eyes will be on Chair Jerome Powell’s post-meeting press conference for clues on future easing—particularly whether the Fed signals an end to quantitative tightening, which could be seen as dovish. Markets are pricing in a 95% chance of this cut, with another in December also highly likely. Bond yields are stable, with the 10-year Treasury at 3.98%.
A wave of reports from AI heavyweights after the close could set the tone for the week. Alphabet (GOOG), Meta Platforms (META), and Microsoft (MSFT) are due, with investors hunting for proof of sustained AI monetisation amid hefty data centre spending. This follows Nvidia’s upbeat update yesterday on $500 billion in AI chip bookings. Apple (AAPL) and Amazon (AMZN) report tomorrow. Tech stocks continue to lead, however, poor market breadth—gains concentrated in a few megacaps like Nvidia—raises flags about near-term support for the broader rally. The small cap index Russell 2000 has been lagging the S&P recently. Yesterday many smaller Tech companies were down while the S&P was up, this is not healthy, a sign we are approaching a top.