The Fed Held Rates in a 10 to 2 Vote. Then Microsoft and Alphabet Split the After Hours Tape

Wednesday delivered exactly the kind of day markets had circled on the calendar. At 2 p.m. Eastern, the Federal Reserve announced it was holding its benchmark rate steady in a range of 3.75 to 4 percent, a widely expected decision that came with two dissents in favor of a hike, according to the official FOMC statement and CNBC. Stocks chopped around after the announcement and finished modestly higher. Then, just after the closing bell, Microsoft and Alphabet reported earnings minutes apart and went in opposite directions: Microsoft climbed about 4 percent in extended trading on an Azure blowout, per CNBC, while Alphabet fell roughly 7 percent after missing on both revenue and earnings, per Yahoo Finance. This is the close update to Tuesday's wrap.

A 10 to 2 vote, and a chair who will not give hints

The committee voted 10 to 2 to keep rates where they have sat since September, when the Fed approved a quarter point increase that was its first hike since 2023. Cleveland Fed President Beth Hammack and Governor Lisa Cook both dissented, each preferring another quarter point increase now, per the Fed's statement.

The statement itself leaned slightly warmer on the economy. The committee described activity as expanding at a strong pace, an apparent upgrade from the word solid in September. On prices, the Fed repeated that inflation remains elevated and said more information would help it determine the appropriate policy stance. Markets already expect more: a Reuters survey cited by CNBC found that while 94 of 100 economists predicted this hold, all 100 forecast another hike in December.

Chair Kevin Warsh used the press conference to reinforce his reluctance to steer expectations, telling reporters he does not believe in forward guidance absent exigent circumstances or a crisis. He also announced that starting in 2027, one of the Fed's eight annual meetings will focus purely on monetary policy strategy rather than rate setting, expanding to two strategy meetings in 2028, according to CNBC's live coverage.

How the regular session closed

The indexes spent the afternoon digesting the decision and ended with a third consecutive day of gains for the S&P 500 and the Dow. Per Yahoo Finance, the S&P 500 rose 0.28 percent to 7,743.98, the Nasdaq Composite added 0.27 percent to 26,549.85, and the Dow climbed 97.53 points, or 0.19 percent, to 52,475.10.

Two single stock stories stood out during the day. Oracle surged 12 percent after projecting roughly $225 billion in fiscal 2030 revenue, about 35 percent annualized growth, per Yahoo Finance. And South Korean memory chipmaker SK Hynix reported a 632 percent jump in operating profit; its Seoul listed shares closed 11 percent higher, helping push the Kospi up 6.6 percent, according to CNBC.

Bonds did not share the equity market's calm. The 10 year Treasury yield climbed to about 5.05 percent at the close, according to Yahoo Finance. A 10 year yield holding above 5 percent keeps steady upward pressure on mortgage rates and other long term borrowing costs, even while the Fed itself stands still.

Oil pushed higher on a refinery attack claim and renewed Iran risk

Energy was the other big mover. Brent crude rose 1.3 percent to settle at $115.32 a barrel and West Texas Intermediate gained 2.9 percent to $102.78, per CNBC. Yemen's Houthis claimed a missile strike on Saudi Arabia's Ras Tanura refinery, the kingdom's largest, though Saudi officials had not confirmed the extent of any damage by Wednesday's close. The Wall Street Journal also reported that Washington has warned several Gulf countries to prepare for a possible renewed U.S. military campaign against Iran after the November 3 midterm elections.

Supply data added to the pressure. U.S. commercial crude stockpiles fell by 2 million barrels in the week ended October 23, and UBS now expects Brent to hold near $110 through year end, per CNBC. One note of caution: the FOMC statement records only that Cook and Hammack preferred a hike, not why. Linking their dissents to energy driven inflation is our inference, not something the Fed said.

After the bell: one beat, one miss, two very different reactions

Microsoft's quarter, its first of fiscal 2027, covering July through September, was strong nearly everywhere. Revenue came in at $92.3 billion, up 19 percent and ahead of the roughly $90.7 billion that analysts polled by LSEG expected, with adjusted, non GAAP earnings of $4.89 per share versus about $4.73 expected, per CNBC. The headline was Azure: revenue of $33.2 billion, up 48 percent from a year earlier, a sharp acceleration from the June quarter's 42 percent pace, per CNBC. Wednesday was the first regular earnings report to carry that quarterly dollar figure, but it was not Microsoft's first such disclosure: a September 2 reporting change presentation had already published restated quarterly Azure revenue going back two years, including about $29.4 billion for the quarter ended June 30, per CNBC. Commercial remaining performance obligations, essentially contracted future revenue, grew 73 percent to $677 billion. The costs are enormous too: capital expenditures and finance leases hit $45.2 billion for the quarter, and free cash flow fell 27 percent from a year ago. Shares rose about 4 percent in extended trading, per CNBC.

Alphabet grew fast and still disappointed. Revenue rose 25 percent to $127.6 billion, the company's thirteenth straight quarter of double digit growth, but that landed just below the roughly $127.9 billion consensus, and reported GAAP diluted earnings of $2.12 per share, a figure that includes a large investment loss, came in well under the roughly $3.01 analysts expected, according to the company's press release filed with the SEC and Yahoo Finance. The miss was driven largely by an $8.7 billion loss on equity securities, a non operating markdown on investment holdings, while capital spending of $51.4 billion pushed free cash flow negative. The irony is that Google Cloud had a landmark quarter, with revenue up 103 percent to $30.7 billion on AI infrastructure demand and TPU chip sales. The stock closed the regular session at $324.89, then fell roughly 7 percent in after hours trading, per Yahoo Finance.

What this means for your money

First, on rates: the Fed holding does not mean borrowing costs are easing. With every economist in that Reuters survey expecting a December hike and the 10 year yield above 5 percent, plan on savings yields staying attractive and loan rates staying expensive into 2027. High yield savings accounts and CDs continue to benefit; anyone carrying variable rate debt should not count on relief soon.

Second, Wednesday night is a clean lesson in single stock risk. Two of the largest companies on earth reported within minutes of each other, and the gap between their after hours moves, up about 4 percent versus down about 7 percent, came to roughly 11 percentage points. Owners of a broad index fund effectively held both sides of that trade; anyone concentrated in a single name had a much rougher evening. Earnings season is when option markets price in exactly this kind of swing, something we unpack in our guide to implied volatility.

Third, the AI spending question keeps sharpening rather than resolving. Investors rewarded Microsoft for pairing a huge cloud quarter with $45 billion in quarterly capex, and punished Alphabet for spending $51 billion while headline earnings fell short, even with cloud revenue doubling. The market is no longer paying for spending alone; it wants to see the revenue curve bend first, a theme that also ran through this morning's look at Visa's results.

None of this changes the boring math that actually builds wealth for most households. Steady contributions into a diversified portfolio, left alone through nights like this one, do the heavy lifting. The calculator below is purely hypothetical, but it shows why time in the market matters more than any single Fed meeting or earnings print.

What comes next

The earnings gauntlet is not over. Amazon reports after Thursday's close, extending the week's test of how much AI and cloud spending investors will tolerate. Alphabet's management faces questions about whether capital spending keeps climbing, and energy markets will stay glued to the Gulf headlines heading into the November 3 U.S. midterms. With Warsh explicitly refusing forward guidance, December's meeting arrives with expectations high and no promises made, which is precisely the setup where surprises hurt most.