{"id":440975,"date":"2026-10-28T12:40:13","date_gmt":"2026-10-28T05:40:13","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/wall-street-faces-a-double-test-as-fed-decision-and-microsoft-alphabet-earnings-loom-440975\/"},"modified":"2026-10-28T12:40:13","modified_gmt":"2026-10-28T05:40:13","slug":"wall-street-faces-a-double-test-as-fed-decision-and-microsoft-alphabet-earnings-loom","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/wall-street-faces-a-double-test-as-fed-decision-and-microsoft-alphabet-earnings-loom-440975\/","title":{"rendered":"Wall Street faces a double test as Fed decision and Microsoft, Alphabet earnings loom"},"content":{"rendered":"
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Wall Street enjoyed a bit of a breather in overnight trading, as the S&P 500 gained by 0.6% and Nasdaq closed higher by 1.2%. It’s a welcome relief after drop in the past two weeks as tech shares bounced back, but there are still plenty of reasons for investors to be nervous in trading this week.<\/p>\n

For one, the rebound overnight was not all too convincing once we start to dig a little deeper beneath the surface. It was largely driven by big tech names with most of the stocks in the S&P 500 actually closing lower. That’s not a good signal on market breadth now, is it?<\/p>\n

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And with the Fed decision coming up later today, followed by earnings from Microsoft and Alphabet after the closing bell, there’s still quite a lot that could go wrong.<\/p>\n

Now, the Fed\u00a0is widely expected to leave interest rates unchanged. So,\u00a0I don’t see the decision itself being much of a surprise. All eyes will be on Fed chair Warsh’s press conference as markets will be listening closely\u00a0for any signals on December, particularly with Treasury yields still hovering near 5%.<\/p>\n

With that in mind, any suggestion that policymakers are becoming even more uncomfortable with the inflation outlook could easily put another dent in risk sentiment.<\/p>\n

And that will be especially relevant for tech stocks, where\u00a0higher borrowing costs and lofty valuations are already making investors question just how much optimism is justified.<\/p>\n

Microsoft’s earnings will be closely scrutinised for whether its AI growth can continue to justify the enormous spending commitments<\/a>. In particular, there will be plenty of watchful eyes on its Azure growth, cloud margins and capital expenditure especially.<\/p>\n

As for Alphabet, they will face similar scrutiny\u00a0with Google Cloud performance, AI monetisation and infrastructure spending all under the microscope.<\/p>\n

At this point, I’m not sure that investors will be satisfied in just hearing that AI demand remains strong. It seems that they might want\u00a0clearer evidence that all those billions being spent are translating into sustainable earnings growth. And that’s where the real test for the AI trade lies at the moment.<\/p>\n

It’s going to be quite a tricky test for stocks and broader markets in the coming day(s). While a more hawkish Fed could\u00a0put renewed upward pressure on Treasury yields,\u00a0disappointing earnings guidance could reignite concerns over the AI spending boom. The latter is one that could even see both yields and stocks fall at the same time<\/a>.<\/p>\n

So while the calmer mood overnight is a little encouraging, it is best to be mindful that the real test for markets this week is still yet to come.<\/p>\n

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This article was written by Justin Low at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

Wall Street enjoyed a bit of a breather in overnight trading, as the S&P 500 gained by 0.6% and Nasdaq closed higher by 1.2%. It’s a welcome relief after drop in the…<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-440975","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/440975","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=440975"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/440975\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=440975"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=440975"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=440975"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}