U.S. stocks pulled back Wednesday as Wall Street braced for a rare collision of catalysts: a Federal Reserve interest rate decision, the final policy meeting of Chair Jerome Powell's term, and after-the-bell earnings from four of the Magnificent Seven companies. The S&P 500 declined 0.5% to finish at 7,138.80, while the Dow Jones Industrial Average slipped 0.1% to 49,141.93 and the tech-heavy Nasdaq Composite fell 0.9% to 24,663.80.
Fed Expected to Hold for a Third Straight Meeting
The Federal Open Market Committee is widely expected to leave its target range unchanged at 3.50%–3.75% when it announces its decision at 2 p.m. ET, followed by Powell's press conference at 2:30 p.m. Polymarket traders assigned a 99.9% implied probability to no change heading into the announcement, which would mark the third consecutive pause of 2026.
The decision arrives against an awkward backdrop. March CPI accelerated to 3.3% year-over-year — the highest reading since May 2024 — driven by oil price shocks and energy costs tied to the recent Iran conflict. Policymakers have spent the year weighing the inflationary pull of President Trump's tariffs and the energy shock against a softening labor market.
The meeting is widely expected to be Powell's last as chair. His term concludes on May 15, 2026, with Kevin Warsh viewed as the leading candidate to succeed him.
Mag 7 Earnings Set Up an 80-Second Window
After the closing bell, Alphabet, Amazon, Meta Platforms and Microsoft are all scheduled to report quarterly results, with Bloomberg noting the four heavyweights are slated to release within an 80-second window — an unusually narrow stretch that will test how quickly markets can digest the data.
Street consensus heading into the prints:
- Microsoft: EPS near $4.04 on revenue of roughly $81.4 billion, with Azure growth expected near 31% in constant currency.
- Alphabet: EPS of $2.64 on $92.2 billion in revenue, with Google Cloud growth pegged near 28%.
- Meta: Adjusted EPS of about $7.51 on roughly $55.5 billion in revenue, up about 31% year-over-year.
- Amazon: Adjusted EPS of about $2.11 on revenue of about $177.2 billion, with AWS growth expected near 18%.
Investors are zeroed in on AI infrastructure capex guidance. Combined 2026 commitments already disclosed are eye-watering: Meta has guided to $115–$135 billion, Alphabet to $175–$185 billion and Amazon to roughly $200 billion. Cloud growth rates remain the cleanest read on whether enterprise AI demand is keeping pace with that spending.
Caution Tone Ahead of Catalysts
Wednesday's pullback extended a cautious stretch. The S&P 500 had set a record close earlier in the week before chip stocks led a selloff Tuesday on a report covering OpenAI's revenue trajectory. Oil prices climbed again Wednesday, adding pressure on rate-sensitive names even as Treasury markets priced in no Fed move.
With trillions in market capitalization riding on the next several hours of headlines, traders entered the close positioning defensively rather than chasing the recent record highs.
Sources: TheStreet, Yahoo Finance, CNBC, CBS News, Bloomberg