Markets were bracing for the Federal Reserve's latest rate decision, with traders pricing in a roughly one-in-three chance of a surprise rate hike rather than the hold or cut many had anticipated. The uncertainty added an extra layer of tension to an already busy day for risk assets, given the decision was scheduled to land just hours before two of the market's most closely watched earnings reports.
A Decision With Immediate Aftershocks
Microsoft and Meta were both set to report earnings after U.S. markets closed on the same day as the Fed's announcement, meaning any volatility from the rate decision would have little time to settle before investors turned their attention to Big Tech results. That sequencing raised the stakes on both fronts: a hawkish surprise from the Fed could compound with disappointing guidance from either company, or a dovish outcome could cushion any earnings-related selloff.
Big Tech Carries Its Own Weight
Beyond the rate decision itself, Microsoft and Meta's reports were expected to shape sentiment around the broader AI investment cycle that has driven much of this year's mega-cap tech performance. With both companies under scrutiny for how their heavy AI capital expenditure is translating into revenue growth, the earnings were positioned as a test of whether that spending narrative still holds up under investor pressure — regardless of which way the Fed moved.
