Global markets struggled to find a clear direction on October 29 after a busy session shaped by the Federal Reserve and contrasting results from major Big Tech companies, according to Capital.com analysis.
The Fed left interest rates unchanged in a 3.75% to 4.00% range, matching widespread expectations, but provided limited guidance about the timing or path of future policy decisions, the analysis said. It noted that Chair Kevin Warsh acknowledged stronger economic activity and persistent inflation, yet did not clearly explain why policymakers were waiting until December rather than raising rates immediately.
Capital.com said two Fed officials voted in favor of a rate increase, giving the overall message a slightly hawkish tilt. Still, it described the broader policy outlook as largely consistent with what had been indicated in September, with another increase still expected before the end of the year.
The analysis added that the lack of forward clarity leaves markets heavily dependent on incoming data to set expectations. After Warsh’s press conference, Treasury yields rose, with the 10-year yield moving back above 5%. Meanwhile, it said the dollar’s reaction was relatively subdued.
According to the report, investors appear to be weighing what additional evidence policymakers may require before tightening further. It also warned that continued uncertainty could keep bond market volatility elevated and potentially weigh on equity valuations.
AI investment profitability becomes a dividing line
Equities also faced confusion after Alphabet and Microsoft delivered competing narratives on the profitability of artificial intelligence spending. Capital.com said Microsoft shares rose by around 3%, citing strong growth in its Azure cloud platform and improving cash flow as signals that AI-related spending can produce tangible returns.
In contrast, the analysis said Alphabet shares fell nearly 10% in after-hours trading, as concerns about cash generation and the costs associated with expanding its AI efforts outweighed gains tied to cloud performance.
The report framed the divergence as a shift in investor expectations, suggesting markets are becoming less focused on companies merely increasing AI expenditure and more focused on whether that spending supports sustainable profits.
Today’s calendar: GDP, PCE and more earnings
With Nasdaq futures under pressure, the analysis said Amazon’s results later today could serve as another test of how investors are valuing AI-driven strategy and profitability. It also pointed to upcoming US data as potentially more influential for interest rate expectations than the Fed meeting itself.
Capital.com highlighted that October 29’s releases for US gross domestic product (GDP) and the Personal Consumption Expenditures (PCE) inflation measure may shape bets on whether rate hikes strengthen in December. It suggested that continued economic strength alongside persistent inflation would reinforce expectations for tighter policy.
Europe in focus after Fed decision
In Europe, the analysis said the European Central Bank is expected to keep rates unchanged. Attention, it added, will turn to comments from ECB President Christine Lagarde regarding the likelihood of a December hike and the impact of rising European sovereign borrowing costs.
Overall, Capital.com described a market mix of monetary policy uncertainty and increasingly selective views on AI spending, leaving risk appetite vulnerable to further surprises.
