Markets wobble as Fed holds, AI lifts stocks
- The Fed left rates at 3.50% to 3.75% on April 29, but stocks still pushed higher on May 1 as Apple and cloud earnings steadied nerves. (federalreserve.gov) - The unusual detail was four dissenters: one wanted a cut, while three opposed the statement’s easing bias; Apple posted $111.2 billion in revenue. (federalreserve.gov) - AI demand is still the market’s main support, but oil, shipping disruption, and sticky inflation are keeping the macro backdrop uneasy. (money.usnews.com)
Stocks are trying to do two things at once. They’re celebrating another round of giant tech earnings powered by AI and cloud demand, but they’re a(federalreserve.gov)alive. That tension is the whole story right now. On April 29, the Fed held its target rate at 3.50% to 3.75%. By Friday, May 1, the S&P 500 and Nasda(federalreserve.gov)h growth to keep buying. (federalreserve.gov) ### Why didn’t(money.usnews.com)f that to higher global energy prices. It also flagged the Middle East as a source of unusual uncertainty. So even though markets spent months hoping for easier policy, the committee chose to wait. (federalreserve.gov) ### Why was this meeting a little weird? Because the split inside the Fed was unusually visible. One dissenter, Stephen Miran, wanted an immediate quarter-point cut. Three others — Beth Hammack, Neel Kashkari, and Lorie Logan — we(federalreserve.gov)held steady, but for different reasons. That matters because it tells you the next move is not settled at all. (federalreserve.gov) ### So why were stocks still strong? Because earnings kept overpowering the macro anxiety. Reuters’ market wrap said analysts now expect S&P 500 first-(federalreserve.gov)on in a very short time. When profit expectations jump like that, investors will tolerate a lot of rate uncertainty. (money.usnews.com) ### What did Big Tech actually show? The cleanest read is that AI spending is turning into real revenue for cloud platforms. Microsoft said revenue rose 18% to $82.9 billion, (federalreserve.gov)S sales rose 28% to $37.6 billion — its fastest growth in more than three years. Alphabet’s cloud unit posted $6.6 billion in operating income, with margin jumping to 32.9%. (microsoft.com) ### Where did Apple fit in? Apple mattered because it broadened the rally beyond pure AI in(money.usnews.com) revenue, and earnings per share. That helped explain why the S&P 500 and Nasdaq could rise even while parts of the chip trade stayed shaky. (apple.com) ### What’s the catch with the AI story? The catch is that markets love AI demand, but they’re still nervous about how expensive all this buildout is — and whether every dollar of capex will pay off. Reuters also no(microsoft.com)bers. So the market is rewarding the winners, but it’s still quick to punish any hint that spending is outrunning returns. (money.usnews.com) ### Why does oil keep showing up in this story? Because higher oil is one of the fastest ways a good earnings(apple.com)of Hormuz, rising transport costs, and raw-material prices hitting a four-year high. Think of AI as the engine pulling stocks up, while energy prices are the brake dragging behind it. Both are attached to the same market. (money.usnews.com) ### Bottom line? The market’s message is pretty simple. AI and cloud(money.usnews.com)a narrow lane. If oil cools and inflation follows, this rally gets room to run. If energy stays hot, the market keeps living in this awkward split screen. (federalreserve.gov)
