The Federal Reserve is widely expected to leave interest rates unchanged on Wednesday, but the rest of this week could still shake markets: inflation and growth data arrive Thursday morning, and Microsoft, Alphabet and Amazon report earnings in the same stretch. CME Group’s FedWatch tool put the odds of a hold at about 88%, up from 29% a month earlier, according to Kiplinger.
That makes the decision itself less important than what Fed Chair Kevin Warsh says afterward.
Wednesday: the Fed and Warsh
The central bank announces its decision at 2 p.m. ET Wednesday, and Warsh holds a press conference at 2:30 p.m. The Fed raised rates in September, so traders are listening for hints about December. Futures priced roughly an 80% chance of another increase then, according to FXEmpire figures cited by Gotrade. Warsh recently called the AI spending boom an economic shock and promised to keep inflation in check, remarks we covered in our report on his AI warning.
Thursday: growth and inflation numbers
At 8:30 a.m. ET the government publishes third-quarter GDP along with September’s personal income and spending report and the PCE price index, the Fed’s preferred inflation gauge. Strong growth paired with stubborn price increases would give the Fed reason to stay tight. A cooler PCE reading could take some pressure off stocks that depend on lower rates, such as growth and AI companies.
Because the Fed meets before the data comes out, Wednesday’s statement will rest on older numbers, and Thursday’s figures could change the story.
Big Tech reports
Microsoft, Alphabet and Amazon report this week, with the heaviest results expected Wednesday and Thursday. Investors want to see whether the companies that spend the most on artificial intelligence can show enough demand to justify the cost. Last week, worries about AI spending pushed the Nasdaq lower after Meta and Tesla reported, as we covered in our report on the selloff. Verizon kicks off the week with results before Monday’s open.
What to watch
Three signals will matter most: Warsh’s tone on December, whether PCE comes in hot or cool, and whether cloud and AI revenue at the three tech giants keeps growing. Markets can move sharply when all three arrive within two days.
