Two Fed Officials Want a Hike; Amazon Reports Next

NEW YORK, Oct. 29 — TheThe Federal Reserve held its key interest rate on Wednesday, and two of the 12 officials who voted wanted to raise it. The vote was 10–2 to keep the target range for the federal funds rate at 3.75 to 4 percent, where the Fed set it on Sept. 16; Lisa D. Cook, a governor, and Beth M. Hammack, president of the Cleveland Fed, preferred a quarter-point rise.The DissentersGovernors rarely dissent from rate votes, CNBC noted; Ms. Cook had not done so at all since taking her seat in 2022. CNBC expects both to explain their votes this week.

The statement said economic activity was “expanding at a strong pace”; in September it said “solid.” At his press conference, Kevin Warsh, the chairman, pointed to business investment: “Capital expenditures are at a historically high share of GDP,” he said.

“High-tech investment is leading the acceleration,” he went on. “But there’s also been a broadening in other categories. And these trends bear watching.” CNBC read him as saying that artificial intelligence was “just one of several factors driving an expansion that he said was running strong.”

Capital expenditures are at a historically high share of GDP.

What the Fed does next helps set the price of the money behind the build-out. AI stocks have had “big swings on worries that high borrowing costs will undercut the boom in AI data centers largely built with borrowed money,” AP reported. The 10-year Treasury yield rose on Wednesday to 5.05 percent, from 4.99 percent, by the Treasury’s daily par-yield figures, its highest since Oct. 21.

The two-year yield rose above 4.79 percent after the statement and fell as low as 4.69 percent after Mr. Warsh said the Fed wanted to see how conditions played out, AP reported. The Treasury’s separate daily par-yield series put the two-year rate at 4.67 percent, down from 4.70. CME Group’s FedWatch tool put the chance of a quarter-point rise at the next meeting, which ends Dec. 9, at 85.7 percent on Wednesday, CNBC reported.

“The Fed is still taking back some of last year’s rate cuts, and the two dissents underline that tightening bias,” Seema Shah, chief global strategist at Principal Asset Management, said, as quoted by CNBC. “We expect a hike in December and another in early 2027.” Traders still see more rises as likely but pared back their bets on how many may come by next summer, AP reported, citing CME Group data.

Mr. Warsh also changed the calendar: in 2027, he said, “one meeting will focus exclusively on broad monetary policy strategy, with neither a vote on the federal funds rate nor a policy statement anticipated”; in 2028 he expects two such meetings and six for setting policy.The CalendarThe Fed’s published 2027 schedule lists eight meetings. Mr. Warsh said the change would start “next fall.”

Wednesday

Stocks drifted through the decision, and the S&P 500 rose 0.28 percent, to 7,743.98, its third straight gain, 0.96 percent below its record close of Oct. 6. The Nasdaq composite rose 0.27 percent and the Dow 0.19 percent. The PHLX Semiconductor index gained 1.75 percent, to 11,684.00, its fourth straight rise; Micron rose 5.9 percent, to $983.23, “the strongest force lifting the S&P 500,” AP reported.

Vertiv, which sells power and cooling equipment for data centers, rose 16.48 percent, to $242.94, after reporting third-quarter net sales up 61 percent and organic orders up more than 100 percent, and raising its forecasts for the year.

Oracle rose 10.73 percent, to $144.54, after promising at its investor day to limit new capital raised through fiscal 2030 to $20 billion, $10 billion of equity and $10 billion of gross debt, excluding refinancing, beyond the $20 billion of stock it sold earlier in the fiscal year. It set a timeline for positive free cash flow in the second half of fiscal 2028. The cap leans partly on others: vendor financing, customer-provided hardware and customer prepayments “are expected to reduce upfront cash requirements,” Oracle said.

Overnight

After the close the two biggest reports pulled apart: by the end of after-hours trading, at about 8 p.m. Eastern, Alphabet’s shares were down about 10 percent and Microsoft’s up about 2.9 percent. Alphabet’s free cash flow was negative for a second straight quarter; Microsoft’s capital spending fell short of its forecast because “some third-party capacity deliveries we expected in Q1 were delayed,” Amy Hood, its chief financial officer, said on the call. In pre-market trading at 5:39 a.m. Thursday, Alphabet stood about 10 percent below Wednesday’s close and Microsoft about 3 percent above it.

Nasdaq-100 futures were down about 1 percent at 5:29 a.m. In Seoul on Thursday the Kospi fell 1.24 percent, to 5,937.66, and Samsung Electronics, which reported its third quarter, fell 4.13 percent.

What Comes Next

At 8:30 a.m. Eastern on Thursday the Bureau of Economic Analysis publishes its first estimate of third-quarter growth, and September’s personal income and outlays, which carry what CNBC calls “the Fed’s preferred inflation gauge.” Mr. Warsh said the quarter “appears to have brought an even more rapid advance.”

Amazon reports after the close, with its call at 5 p.m. Eastern, against July forecasts of $197.0 billion to $202.0 billion of third-quarter sales and $22.5 billion to $26.5 billion of operating income.AMZNNasdaq240.35▼3.44−1.4%Amazon · Friday’s session Andy Jassy, its chief executive, said in July that Amazon would spend “approximately $220 billion in cash CapEx in 2026,” according to a transcript published by The Motley Fool. Having spent $96.3 billion in the first half, net of proceeds and incentives, it would have about $124 billion left for the second, by this paper’s arithmetic. AWS, its cloud business, grew 37 percent in the second quarter, to $42.2 billion.Amazon’s CashAmazon’s free cash flow for the 12 months to June was an outflow of $7.6 billion, against an inflow of $18.2 billion a year earlier, mainly because of higher spending on property and equipment that “primarily reflects investments in artificial intelligence,” its July release said.

Intel reports after the close, too. Meta Platforms’ $25 billion of common stock, sold at $625 a share under forward sale agreements, and $12.5 billion of preferred are due for delivery on Thursday, by its prospectuses.

Next week Apple holds its call on Monday, Nov. 2, at 5 p.m. Eastern; AMD reports on Tuesday, Nov. 3, and Qualcomm and Arm on Wednesday, Nov. 4, each after the market closes. CoreWeave holds its call on Nov. 10, and Nvidia reports on Nov. 17. The Fed meets again on Dec. 8–9.