Markets Hold Steady Ahead of Fed Decision as Investors Await Microsoft and Meta Results: Dow Jones, S&P, Nasdaq, Wall Street Futures
U.S. stock futures traded close to unchanged on Wednesday as investors prepared for a pivotal session featuring the Federal Reserve’s latest interest rate decision and quarterly earnings from artificial intelligence leaders Meta Platforms (NASDAQ:META) and Microsoft (NASDAQ:MSFT). Meanwhile, renewed military tensions in the Middle East pushed oil prices sharply higher, adding another layer of uncertainty for financial markets.
Futures Trade in a Narrow Range
By 03:20 ET (07:20 GMT), futures tied to the Dow Jones Industrial Average and Nasdaq were little changed, while S&P 500 futures were modestly higher, gaining 13 points, or 0.2%.
Wall Street ended Tuesday’s session with mixed performances. The Dow Jones Industrial Average advanced 1.03%, while the S&P 500 added 0.21%. In contrast, the Nasdaq Composite slipped 0.22% as technology shares remained under pressure.
Semiconductor stocks continued to weigh on the Nasdaq, with the Philadelphia Semiconductor Index falling for a fourth consecutive session and reaching its lowest level since May.
The weakness followed reports of increasing competition from Chinese chipmakers and lingering concerns after Alphabet announced a higher capital expenditure budget last week. South Korean memory chip producer SK Hynix (NASDAQ:SKHY) also disappointed investors after reporting record operating profit that nevertheless failed to satisfy elevated market expectations.
Growing concerns over whether enormous artificial intelligence investments will translate into sustainable earnings have continued to pressure major technology stocks.
Commenting on market sentiment, John Higgins, Chief Economic Adviser at Capital Economics, said: “The share prices of some of the global tech giants at the heart of the AI revolution have come under pressure amid a variety of concerns, raising the question of whether the wheels are falling off the AI stock market train.”
Federal Reserve Decision Takes Centre Stage
Investor attention is now firmly focused on the Federal Reserve, which is scheduled to announce its latest monetary policy decision following the conclusion of its two-day meeting later today.
Policymakers have been assessing the inflationary impact of recent oil price volatility alongside continued heavy investment in artificial intelligence infrastructure. Although June inflation data came in below expectations, renewed conflict in the Middle East briefly pushed crude oil prices above $100 per barrel last week, while spending on AI infrastructure has remained exceptionally strong.
The U.S. labour market has also remained relatively subdued, with hiring and job losses both showing limited movement.
While higher interest rates can help contain inflation, they also risk slowing economic growth and weakening employment conditions.
Analysts at BofA Securities believe today’s decision could largely depend on Federal Reserve Chair Kevin Warsh, who is presiding over only his second policy meeting since taking office.
They said: “Warsh faces a difficult choice. Not hiking could challenge the Fed’s credibility on inflation. But raising rates would go against his framework of looking through supply shocks.”
According to CME FedWatch data ahead of the announcement, markets assigned roughly a 70% probability to interest rates remaining unchanged at 3.50% to 3.75%, while the likelihood of a 25-basis-point increase stood at just under one in three.
Investors are also expecting limited guidance on future policy, with Warsh having previously indicated that he does not intend to provide markets with a detailed roadmap for future interest rate moves.
Meta Faces Another Test of AI Spending Strategy
Technology earnings season gathers pace after Wednesday’s closing bell, when Meta Platforms (NASDAQ:META) publishes quarterly results.
Investors will be looking for further evidence that Meta’s substantial investment in artificial intelligence is generating stronger financial returns.
Earlier this year, the company increased its projected 2026 capital expenditure to between $125 billion and $145 billion, compared with previous guidance of $115 billion to $135 billion.
Meta has also warned that ongoing legal and regulatory scrutiny in both Europe and the United States could weigh on future performance, noting that a “material loss” could result from increased oversight of “youth-related issues” and “additional trials scheduled for this year.”
Microsoft Earnings Under the Spotlight
Microsoft (NASDAQ:MSFT) is also expected to attract significant investor attention as the software giant continues its aggressive expansion in artificial intelligence.
The company has outlined record capital expenditure plans of approximately $190 billion for fiscal 2026, highlighting the intense competition among major technology firms to develop and commercialise AI technologies.
However, investors remain focused on Microsoft’s dependence on OpenAI and whether adoption of its Copilot 365 artificial intelligence assistant is accelerating sufficiently.
Particular attention will centre on Azure cloud computing revenue, where analysts expect constant-currency growth of between 39% and 40% during the fourth quarter.
Even if Microsoft achieves those targets, Azure’s expansion would still lag the growth reported by Google’s cloud business.
Oil Prices Climb Following Renewed Middle East Strikes
Oil prices rose sharply after fresh military action involving the United States, Saudi Arabia and Iran-backed groups increased concerns over global energy supplies.
The latest strikes followed the interception of Iranian ballistic missiles targeting U.S. forces in Jordan, bringing an end to a brief lull in hostilities that had contributed to falling crude prices earlier in the week.
Iran also rejected an Omani proposal to divide control of the Strait of Hormuz, reducing hopes for renewed diplomatic negotiations with Washington.
By 03:17 ET (07:17 GMT), Brent crude futures had risen 3.5% to $87.01 per barrel, while U.S. West Texas Intermediate crude gained 3.8% to $82.27 per barrel.
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