Fed pauses, Big Tech reports
SPY•Wall Street rose on Wednesday after the Federal Reserve held interest rates steady, while investors focused on major earnings reports. The Nasdaq and S&P 500 gained 0.3%, and the Dow rose 0.2%.
1. Stocks rise after Fed decision
Wall Street rose after the Federal Reserve kept interest rates unchanged, as investors focused on key earnings reports. The decision was expected, but the yield curve steepened sharply after Fed Chair Kevin Warsh's press conference. Microsoft rose 6% and Alphabet fell 10% in after-hours trading following results, while Oracle gained 11%.
2. AI and debt issuance
Technology and telecom services are expected to deliver half of S&P 500 earnings growth this year, while six sectors combined are expected to account for 10%. Bank of America analysts expect $175 billion of investment-grade bond issuance in November, up from around $100 billion in October and a record for the month. AI-related debt issuance from U.S. Big Tech is expected to exceed $200 billion this year and could approach $250 billion.
3. Bond market signals
The estimated U.S. 10-year term premium has fallen to around 60 basis points, below this year's average of about 70 basis points, after reaching almost 100 basis points earlier this month. The article cited a safety bid for bonds and cooler expectations for Fed tightening as factors behind the decline.
