Check the latest market moves. Written by Jerry Chen, Senior Analyst at Forex.com. The Federal Reserve's interest rate decision met market expectations and did not trigger significant market volatility, but Alphabet's sharp post-earnings selloff may be changing the logic of the AI trade. Thursday's market focus shifts to the European Central Bank rate decision, U.S. inflation and other economic data, and more technology stock earnings.
Fed keeps rates unchanged; inflation to determine the future rate path
In the early hours of Thursday Beijing time, the Federal Reserve voted 10-2 to keep the federal funds rate range unchanged at 3.75%-4.00%. The Fed signaled that whether to raise rates further will depend on inflation performance, and upgraded its assessment of the economy from "moderate growth" at the September meeting to "strong growth." When asked about economic growth, Warsh said, "The economy is strong, the data for the first three quarters have all been revised higher, and the economy is moving in the right direction... We never truly know what the potential growth rate is. My judgment is that we are seeing productivity improvements, although they cannot be precisely measured. I think most of this productivity change occurred before we started discussing AI, but productivity has been rising." After the rate decision was announced, the market reaction was relatively muted, the dollar edged lower to end a three-day winning streak, the three major U.S. indexes continued their rebound, semiconductor and chip memory sectors rose for a fourth consecutive day, and gold posted a third straight gain to close near $4,067. At the macro level, the focus shifts to tonight's U.S. September PCE price index and the preliminary estimate of third-quarter GDP. The market expects PCE to rise from 3.4% to 3.6%, core PCE to rise from 3% to 3.1%, while third-quarter economic growth is expected to accelerate from 2.2% to 3.2%. Data above expectations (suggesting hot inflation and a strong economy) could become the basis for a Fed rate hike by year-end. The CME FedWatch Tool shows the probability of a Fed rate hike at the December meeting has fallen below 80%.
Alphabet and Microsoft earnings diverge; Nasdaq trend under scrutiny
During after-hours U.S. trading, two major technology giants, Alphabet and Microsoft, reported third-quarter results. Alphabet's biggest third-quarter highlight came from its cloud business, with revenue surging 103% year-on-year to $30.7 billion, showing that enterprise-side AI demand remains strong. However, overall revenue, advertising business revenue, and earnings per share for the quarter all fell short of market expectations, and a massive loss on equity investments severely weighed on profit. The company's third-quarter capital expenditure was approximately $51.4 billion, up 114% year-on-year (in July it had already raised its full-year 2026 capital expenditure guidance to $195-205 billion), free cash flow plunged to negative $9.1 billion, turning negative for a second consecutive quarter and far below market expectations, while trailing twelve-month free cash flow dropped sharply to $19.7 billion. Alphabet's shares plunged 10% after hours. Microsoft's third-quarter overall revenue grew 19% year-on-year, with cloud business surging 48% year-on-year, both beating market expectations. The company's third-quarter capital expenditure was $39.4 billion, and free cash flow remained at a relatively high level of $18.6 billion, with shares rising nearly 3% after hours. The stark contrast between the two after their earnings reports shows that investors are placing increasing importance on cash flow or investment returns in the AI arms race. Last week's sharp selloff in META shares after its cash flow turned negative already proved this point, and Amazon and Intel earnings reports due early tomorrow may provide further evidence. As technology giants' trajectories diverge, the Nasdaq index's short-term momentum has weakened somewhat; the 28,800 level is a technical position that the market is watching. Major indexes have shown differing recent performance, and their subsequent evolution still needs to be observed. This article does not make judgments on specific index performance. Chart: NASDAQ 100 daily chart. Source: TradingView.
European Central Bank rate decision preview
Considering Europe's current internal economic and political environment (especially in France), the European Central Bank is highly likely to keep rates unchanged tonight (21:15), and the possibility of the next rate hike being pushed to early next year is rising. For the ECB, while there is justification for raising rates to fight inflation (eurozone September CPI was 3.8%), it also needs to consider that a rate hike could exacerbate government bond selloffs in France and other European countries, leading to more severe capital market turmoil. If the central bank releases a more dovish signal in its statement, the market's pricing of the euro may adjust accordingly. The actual trend depends on changes in the policy path and liquidity conditions, and there is considerable uncertainty. From a technical perspective, the euro is in a low range not seen since May 2025. On the 4-hour chart, 1.1113, 1.1175 (near the EMA), and 1.1275 are technical reference levels that the market is watching. The above is merely an objective record of technical patterns, does not represent future performance, and does not constitute any trading advice; the subsequent direction depends on the ECB decision and changes in policy expectations, and there is considerable uncertainty. Chart: EURUSD 4-hour chart. Source: TradingView.
Comments