Wednesday was one of those sessions where the Fed decision was arguably the fourth or fifth most important thing that happened.
Chair Kevin Warsh kept the policy rate on hold, exactly as the market expected, and stocks briefly liked it. Then the details of the vote surfaced, the bond market re-priced in real time, oil ripped 7% higher on renewed Trump-Iran language, and by the close the Dow was down more than 2% with the Nasdaq not far behind.
After the bell, Microsoft delivered the kind of AI number that shuts sceptics up, while Meta did the opposite and reopened every question investors have been asking about the sustainability of hyperscaler spending.
The Rundown
- The Fed held rates steady but three dissenters wanted a hike, and the long end of the curve responded by pushing yields to multi-year highs.
- Renewed geopolitical language around Iran sent oil up sharply, feeding the inflation worry that the Fed's hold was supposed to soothe.
- Semiconductors and AI-adjacent industrials led the selling as investors kept trimming capex-heavy names.
- After-hours earnings split the megacap AI trade cleanly down the middle, one blowout, one disappointment.
The Fed Decision That Didn't Land Where It Was Supposed To
The headline was benign. The Federal Open Market Committee left the target range at 3.50%–3.75% and Chair Kevin Warsh's opening remarks emphasised the 2% inflation target as, in his words, "not soft." That should have been a green light for equities. It wasn't, and the reason sits in the vote itself: three governors dissented, all in favour of raising rates to push back on inflation that hasn't obliged the Fed by rolling over. That's a hawkish tilt inside a nominally neutral decision, and the bond market saw it immediately.
The ten-year yield jumped nine basis points to 4.70%. The thirty-year added eleven basis points to 5.21%, the highest level in years. That is the market pricing in the possibility that the Fed is now visibly behind the inflation curve — and importantly, that the political and internal appetite for another hike is real. Warsh's aside that market participants "should learn to play, not to referee" reinforced the message: this Fed is not going to cushion any tantrums.
Oil Went Up, Everything Else Went Down
The macro side got worse from there. President Trump used a Fox News interview to warn Iran of a hard response to attacks on US troops in the region, and the oil market did exactly what you would expect. WTI jumped 7.4% to $88 a barrel, one of the largest one-day moves in months, on top of a stronger-than-expected drawdown in US crude inventories despite 3.8 million barrels being released from the Strategic Petroleum Reserve.
A supply-side shock landing on top of a bond market that just re-priced inflation risk is not a friendly combination for equities carrying premium multiples.
That is roughly the moment the tape gave up. The Dow Jones (DIA | ???2.19%) shed 2.2%, the Nasdaq 100 (QQQ | ???2.06%) closed 2.1% lower, and the S&P 500 (SPY | ???1.9%) got dragged down with them. The one place investors could hide was, predictably, the energy patch.
EOG RESOURCES INC (EOG | ???4.51%), APA CORP (APA | ???5.07%) and gas producer EXPAND ENERGY CORP (EXE | ???4.45%) all closed sharply higher, riding the crude move directly into the print.
The Chip Complex Got Sold Again And So Did The AI Industrials
The semiconductor sell-off from earlier in the week broadened.
ADVANCED MICRO DEVICES (AMD | ???5.51%) dropped another 5.5%, and APPLIED MATERIALS INC (AMAT | ???8.40%) took an 8.4% hit, the kind of one-day move that usually needs a specific catalyst but here really didn't. ARM HOLDINGS PLC-ADR (ARM | ???8.11%) fell 8.1% during the regular session even though its Q1 results printed a record 22% revenue growth to $1.29 billion after the bell, with data-center royalties more than doubling year-over-year. The stock barely moved in extended trading, which tells you more or less everything about what the market is currently willing to pay for AI-infrastructure exposure.
The more telling name was CATERPILLAR INC (CAT | ???6.91%). Cat has been treated as an AI derivative for months thanks to its exposure to power generators for data centers, but Baird downgraded the stock on the view that tightening local regulation and NIMBY opposition are set to slow new data-center construction.
This is the second signal in a week - the SK Hynix capex bomb was the first - that the market is starting to interrogate the assumed straight-line growth in hyperscaler build-out. GOLDMAN SACHS GROUP INC (GS | ???5.09%) also weighed on the Dow with a 5.1% drop, though there was less of a story attached to that one beyond the broader risk-off tone.
Garmin And GE Healthcare Prove Earnings Still Matter
Away from the wreckage, two names showed what a clean beat still looks like. GARMIN LTD (GRMN | ???16.23%) exploded 16% higher after reporting a Q2 that felt almost from a different market.
- Net profit climbed 30% to $616 million on a record top line, driven almost entirely by the fitness division, the sport watches and cycling computers business, where consumers still aren't cutting back.
- CEO Clifton Pemble raised full-year revenue guidance to above $8 billion and, importantly, launched the Cirqa Smart Band, a screen-less wellness tracker without a subscription requirement.
Anyone doubting whether Garmin can still find whitespace in wearables got their answer.
GE HEALTHCARE TECHNOLOGY (GEHC | ???12.15%) tacked on 12% after its own Q2 beat, with margins ahead of expectations. That's two very different consumer- and healthcare-adjacent tech businesses telling the same story: when earnings visibility is high and capex is measured, this market will pay up.
PROCTER & GAMBLE CO/THE (PG | ???1.87%) drifted 1.9% lower after its Q4 print showed higher sales but softer earnings, a reminder that "beat on revenue" alone doesn't cut it right now.
Microsoft Delivered The Number, Meta Didn't
Then the megacaps reported.
MICROSOFT CORP (MSFT | ???0.71%) posted a genuinely strong Q4 for its broken fiscal 2025/'26:
- $90 billion in revenue against a $87 billion consensus
- Azure and AI revenue crossing the $100 billion annual mark for the first time
- Copilot at more than 30 million paying users (up from 20 million in April)
- Capex for the quarter climbed 70% to $41 billion, on a full-year investment pace of around $190 billion, but the top-line growth was strong enough to buy management the benefit of the doubt.
CEO Satya Nadella got exactly the print he needed. The stock, which is still down roughly 18% year-to-date and had been the laggard of the big cloud names, jumped more than 8% in after-hours trading. That is the market saying: fine, if the growth shows up, we'll fund the spend.
META PLATFORMS INC-CLASS A (META | ???1.31%) got the opposite reception.
- Revenue of $60.8 billion beat the $60.2 billion consensus and ad prices ran 12% higher year-over-year, so the core engine is intact
- EPS of $6.18 missed the $7.14 consensus
- capex climbed to $31.08 billion in the quarter
- free cash flow collapsed 91% year-over-year to just $784 million.
The stock fell 8% in after-hours trading. Mark Zuckerberg confirmed on the call that Meta will keep spending aggressively - the low end of the 2026 capex range was actually raised to $130 billion from $125 billion - and hinted that Meta will build out a rentable compute business alongside its own AI training needs. That's a longer-dated payoff story than Microsoft's, and this market isn't in a mood to wait.
To me, the investors’ reaction seems clear: spending is fine, as long as revenue and margins grow along with it. What investors really can’t stand is a sharp decline in free cash flow. In that regard, the response to Meta’s results seems similar to the one to Alphabet’s results last week...
Robinhood And Starbucks, Two Different After-Hours Stories
ROBINHOOD MARKETS INC - A (HOOD | ???3.15%) reported a strong Q2 - revenue up 32% to $1.31 billion, adjusted EPS of $0.48 versus $0.43 consensus - but the stock still slipped about 3% after hours.
Crypto trading revenue collapsed 38% year-over-year to $100 million, and while equities, options and the newer event-contracts business more than filled the gap (event contracts alone brought in $156 million, up 10x), the market is still figuring out how to price a diversified Robinhood. Management now runs thirteen product lines each doing over $100 million in annualised revenue, and the newly launched "Trump Accounts" already have 7 million signups and $1.5 billion in deposits. This is a very different Robinhood than the meme-stock-era version.
STARBUCKS CORP (SBUX | ???1.01%) was the after-hours highlight, jumping about 7% on a Q3 that showed the "Back to Starbucks" playbook actually working.
- Same-store sales rose for the fourth consecutive quarter
- Adjusted operating margin improved 430 basis points to 14.4%, and North America comps ran up 8.1%
- Management raised full-year adjusted EPS guidance to $2.55–$2.65 (from $2.25–$2.45) and now expects global comps close to 6%.
The China deconsolidation into the Boyu Capital JV dragged reported revenue down 1% year-over-year, but strip that out and the underlying business is genuinely turning. CEO Brian Niccol earned some credibility here.
Conclusion
Wednesday was a tape where every piece of good news was outweighed by something worse.
The Fed's hold got repriced by its own dissent count within an hour. Oil ripped on geopolitical language. Chip and AI-industrial names were sold on a market that no longer wants open-ended capex stories without matching revenue. Microsoft delivered the AI proof-point investors have been demanding; Meta didn't, and paid for it immediately.
My bias into Thursday: the split between "clean-earnings names" and "capex-heavy names" is now the defining trade of this cycle, and until the long end of the curve stops rising, high-multiple growth is going to keep working against, not for, the tape. AMAZON.COM INC (AMZN | ???1.82%) and APPLE INC (AAPL | ???0.56%) report over the next 48 hours, both prints matter, but the market is now grading them on the same rubric that just crushed Meta and rewarded Microsoft.
ChartMill Market Desk - Kristoff
With regard to the stocks discussed in the article above; the author owns individual shares in Microsoft & APA.
This daily update is prepared by ChartMill for informational purposes only and does not constitute investment advice. Always do your own due diligence before making investment decisions.
Read full article here »
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The Fed Held, The Bond Market Called The Bluff, and Oil Did The Rest
Wednesday was one of those sessions where the Fed decision was arguably the fourth or fifth most important thing that happened.
Chair Kevin Warsh kept the policy rate on hold, exactly as the market expected, and stocks briefly liked it. Then the details of the vote surfaced, the bond market re-priced in real time, oil ripped 7% higher on renewed Trump-Iran language, and by the close the Dow was down more than 2% with the Nasdaq not far behind.
After the bell, Microsoft delivered the kind of AI number that shuts sceptics up, while Meta did the opposite and reopened every question investors have been asking about the sustainability of hyperscaler spending.
The Rundown
The Fed Decision That Didn't Land Where It Was Supposed To
The headline was benign. The Federal Open Market Committee left the target range at 3.50%–3.75% and Chair Kevin Warsh's opening remarks emphasised the 2% inflation target as, in his words, "not soft." That should have been a green light for equities. It wasn't, and the reason sits in the vote itself: three governors dissented, all in favour of raising rates to push back on inflation that hasn't obliged the Fed by rolling over. That's a hawkish tilt inside a nominally neutral decision, and the bond market saw it immediately.
The ten-year yield jumped nine basis points to 4.70%. The thirty-year added eleven basis points to 5.21%, the highest level in years. That is the market pricing in the possibility that the Fed is now visibly behind the inflation curve — and importantly, that the political and internal appetite for another hike is real. Warsh's aside that market participants "should learn to play, not to referee" reinforced the message: this Fed is not going to cushion any tantrums.
Oil Went Up, Everything Else Went Down
The macro side got worse from there. President Trump used a Fox News interview to warn Iran of a hard response to attacks on US troops in the region, and the oil market did exactly what you would expect. WTI jumped 7.4% to $88 a barrel, one of the largest one-day moves in months, on top of a stronger-than-expected drawdown in US crude inventories despite 3.8 million barrels being released from the Strategic Petroleum Reserve.
A supply-side shock landing on top of a bond market that just re-priced inflation risk is not a friendly combination for equities carrying premium multiples.
That is roughly the moment the tape gave up. The Dow Jones (DIA | ???2.19%) shed 2.2%, the Nasdaq 100 (QQQ | ???2.06%) closed 2.1% lower, and the S&P 500 (SPY | ???1.9%) got dragged down with them. The one place investors could hide was, predictably, the energy patch.
EOG RESOURCES INC (EOG | ???4.51%), APA CORP (APA | ???5.07%) and gas producer EXPAND ENERGY CORP (EXE | ???4.45%) all closed sharply higher, riding the crude move directly into the print.
The Chip Complex Got Sold Again And So Did The AI Industrials
The semiconductor sell-off from earlier in the week broadened.
ADVANCED MICRO DEVICES (AMD | ???5.51%) dropped another 5.5%, and APPLIED MATERIALS INC (AMAT | ???8.40%) took an 8.4% hit, the kind of one-day move that usually needs a specific catalyst but here really didn't. ARM HOLDINGS PLC-ADR (ARM | ???8.11%) fell 8.1% during the regular session even though its Q1 results printed a record 22% revenue growth to $1.29 billion after the bell, with data-center royalties more than doubling year-over-year. The stock barely moved in extended trading, which tells you more or less everything about what the market is currently willing to pay for AI-infrastructure exposure.
The more telling name was CATERPILLAR INC (CAT | ???6.91%). Cat has been treated as an AI derivative for months thanks to its exposure to power generators for data centers, but Baird downgraded the stock on the view that tightening local regulation and NIMBY opposition are set to slow new data-center construction.
This is the second signal in a week - the SK Hynix capex bomb was the first - that the market is starting to interrogate the assumed straight-line growth in hyperscaler build-out. GOLDMAN SACHS GROUP INC (GS | ???5.09%) also weighed on the Dow with a 5.1% drop, though there was less of a story attached to that one beyond the broader risk-off tone.
Garmin And GE Healthcare Prove Earnings Still Matter
Away from the wreckage, two names showed what a clean beat still looks like. GARMIN LTD (GRMN | ???16.23%) exploded 16% higher after reporting a Q2 that felt almost from a different market.
Anyone doubting whether Garmin can still find whitespace in wearables got their answer.
GE HEALTHCARE TECHNOLOGY (GEHC | ???12.15%) tacked on 12% after its own Q2 beat, with margins ahead of expectations. That's two very different consumer- and healthcare-adjacent tech businesses telling the same story: when earnings visibility is high and capex is measured, this market will pay up.
PROCTER & GAMBLE CO/THE (PG | ???1.87%) drifted 1.9% lower after its Q4 print showed higher sales but softer earnings, a reminder that "beat on revenue" alone doesn't cut it right now.
Microsoft Delivered The Number, Meta Didn't
Then the megacaps reported.
MICROSOFT CORP (MSFT | ???0.71%) posted a genuinely strong Q4 for its broken fiscal 2025/'26:
CEO Satya Nadella got exactly the print he needed. The stock, which is still down roughly 18% year-to-date and had been the laggard of the big cloud names, jumped more than 8% in after-hours trading. That is the market saying: fine, if the growth shows up, we'll fund the spend.
META PLATFORMS INC-CLASS A (META | ???1.31%) got the opposite reception.
The stock fell 8% in after-hours trading. Mark Zuckerberg confirmed on the call that Meta will keep spending aggressively - the low end of the 2026 capex range was actually raised to $130 billion from $125 billion - and hinted that Meta will build out a rentable compute business alongside its own AI training needs. That's a longer-dated payoff story than Microsoft's, and this market isn't in a mood to wait.
To me, the investors’ reaction seems clear: spending is fine, as long as revenue and margins grow along with it. What investors really can’t stand is a sharp decline in free cash flow. In that regard, the response to Meta’s results seems similar to the one to Alphabet’s results last week...
Robinhood And Starbucks, Two Different After-Hours Stories
ROBINHOOD MARKETS INC - A (HOOD | ???3.15%) reported a strong Q2 - revenue up 32% to $1.31 billion, adjusted EPS of $0.48 versus $0.43 consensus - but the stock still slipped about 3% after hours.
Crypto trading revenue collapsed 38% year-over-year to $100 million, and while equities, options and the newer event-contracts business more than filled the gap (event contracts alone brought in $156 million, up 10x), the market is still figuring out how to price a diversified Robinhood. Management now runs thirteen product lines each doing over $100 million in annualised revenue, and the newly launched "Trump Accounts" already have 7 million signups and $1.5 billion in deposits. This is a very different Robinhood than the meme-stock-era version.
STARBUCKS CORP (SBUX | ???1.01%) was the after-hours highlight, jumping about 7% on a Q3 that showed the "Back to Starbucks" playbook actually working.
The China deconsolidation into the Boyu Capital JV dragged reported revenue down 1% year-over-year, but strip that out and the underlying business is genuinely turning. CEO Brian Niccol earned some credibility here.
Conclusion
Wednesday was a tape where every piece of good news was outweighed by something worse.
The Fed's hold got repriced by its own dissent count within an hour. Oil ripped on geopolitical language. Chip and AI-industrial names were sold on a market that no longer wants open-ended capex stories without matching revenue. Microsoft delivered the AI proof-point investors have been demanding; Meta didn't, and paid for it immediately.
My bias into Thursday: the split between "clean-earnings names" and "capex-heavy names" is now the defining trade of this cycle, and until the long end of the curve stops rising, high-multiple growth is going to keep working against, not for, the tape. AMAZON.COM INC (AMZN | ???1.82%) and APPLE INC (AAPL | ???0.56%) report over the next 48 hours, both prints matter, but the market is now grading them on the same rubric that just crushed Meta and rewarded Microsoft.
ChartMill Market Desk - Kristoff
With regard to the stocks discussed in the article above; the author owns individual shares in Microsoft & APA.
This daily update is prepared by ChartMill for informational purposes only and does not constitute investment advice. Always do your own due diligence before making investment decisions.
Read full article here »