Thursday’s big stock stories: What’s likely to move the market in the next trading session

The S&P 500 closed lower after Federal Reserve Chair Jerome Powell signaled no immediate rate cuts, a decision that saw two rare dissents, reinforcing a hawkish outlook. Conversely, Meta Platforms and Microsoft shares surged post-market by 12% and 10% respectively, on strong earnings and AI-driven capital expenditure growth that significantly exceeded Street expectations, signaling robust AI monetization potential. Upcoming earnings from Apple, Amazon, Mastercard, and Coinbase are now in focus, while copper prices sharply declined 18% following the imposition of new tariffs.

Analysis

The market is exhibiting a significant divergence between macroeconomic pressures and company-specific catalysts, particularly within the technology sector. The S&P 500 closed lower following Federal Reserve Chair Jerome Powell's signaling that the central bank is not prepared to lower interest rates from the current 4.25%-4.50% target range. This hawkish stance was underscored by two dissenting votes on the decision, a rare event last seen in 1993, which reinforces market uncertainty despite the prevailing policy direction. In stark contrast, a powerful AI-driven narrative propelled Meta Platforms and Microsoft shares up 12% and 10% in after-hours trading, respectively. Meta's guidance for a 48% increase in capital expenditures, dramatically above the 11% Street consensus, signals immense confidence in the earnings potential of AI investments. This suggests that select companies with dominant AI strategies may be decoupling from broader market sentiment. Elsewhere, commodity markets reacted sharply to trade policy, with copper falling 18% after a new 50% tariff was announced. Investors are now focused on upcoming earnings from key players like Apple, which has seen its stock drop 1.6% in the past three months, and Amazon, which has gained about 25% over the same period.

Key Decisions for Investors

• Consider overweighting exposure to mega-cap technology firms with demonstrable AI monetization strategies, as their aggressive capital expenditure, like Meta's 48% guided growth, indicates potential to outperform in a challenging macro environment.
• Maintain a cautious stance on the broader market, as the Federal Reserve's hawkish policy and internal dissent create headwinds for sectors sensitive to interest rates, with the 10-year Treasury yield holding at 4.37%.
• Review exposure to commodities and industrial sectors, as the 18% single-day drop in copper following a tariff announcement highlights the acute risk of sudden trade policy shifts.
• Closely monitor upcoming earnings from Apple and Amazon, as their performance will be a critical test of whether the current tech rally is broad-based or confined to a few AI leaders.