Closing Bell: Stocks Higher with Fed on Hold, MSFT Earnings Beat Estimates

The major U.S. equity indexes moved modestly higher as Federal Reserve policymakers held interest rates steady on another plentiful day for earnings reports. 

The S&P 500 (SPX) closed up 0.28%, while the Dow Jones Industrial Average ($DJI) rose 0.19%.  The Nasdaq-100 (NDX) was up 0.55%, and the small-cap Russell 2000 (RUT) was up 0.41%.  

Three things to watch from Wednesday's market action: 

Fed Keeps Interest rates on Hold 

The Federal Open Market Committee (FOMC) held rates at 3.75% to 4% as widely anticipated, and the Fed's messaging was that economic activity is expanding at a "strong pace," updated from a "solid pace." Inflation remains above the Fed's 2% goal, and two of the 12 FOMC voting members, Beth Hammack and Lisa Cook, dissented, meaning they preferred to raise rates at this meeting. Fed Chair Kevin Warsh noted that inflation has been elevated for six years, and said the committee's discussions included geopolitics. But Warsh emphasized as he did in September that it is the long-term trends in the data that will underpin Fed monetary policy. The futures price of WTI, the U.S. oil benchmark, was up 2.6% to a recent $102.47. See Fed Holds Interest Rates: Gauging FOMC Views on Energy Supply Shock, Housing and Schwab IMPACT 2026: Liz Ann Sonders on Finding AI Winners, Fed's Rate Path 

Alphabet Earnings Disappoint, Stock Sinks After Hours 

All eyes were on earnings reports from Alphabet (GOOGL), which slumped more than 7% after reporting profit of $2.12 per share, on revenue of $127.58 billion, which fell short of expectations, though cloud revenue was a bright spot. Free cash flow was negative and fell below expectations, and capital expenditures reached $51.36 billion, below expectations, as the company invests in infrastructure for AI computing power for itself and customers.  

Microsoft Earnings Beat Estimates, Shares Rise 

Microsoft (MSFT) shares were up more than 2% after reporting adjusted earnings of $4.89 per share, ahead of estimates, on revenue of $90.28 billion, which rose 19% from last year. Azure cloud revenue was up 48% to more than $33 billion. Free cash flow dropped 27% to $18.6 billion. CapEx topped $45 billion in the quarter, up 30% from the prior year. See MSFT & GOOGL 'Tale of Two Companies' for AI: Buildout & Cloud Take Earnings Focus and Can Microsoft, Alphabet Earnings and Growth Outpace AI Spending Fears?  

For more on the remaining earnings calendar for the week, and economic data, see Week Ahead: Earnings and FOMC Interest Rate Decision in Focus 

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