Fed Holds Rates at 3.75% to 4% Amid Dissent and Mixed Corporate Results
Key Facts
On October 28, the Federal Reserve kept its target interest-rate range at 3.75% to 4%, in a decision approved by a 10-to-2 vote. Lisa Cook and Beth Hammack dissented, preferring to raise the range by a quarter percentage point at the meeting. The vote came as the central bank described economic activity as expanding at a solid pace and noted that inflation remained elevated. The Fed said the accumulation of more information would help the committee determine the appropriate policy to return inflation to its 2% goal in a timely manner. The split vote puts the hold in the context of an ongoing debate within the committee over the appropriate level of monetary restraint.
In corporate results, Microsoft reported revenue of 92.3 billion dollars for the quarter ended September 30, 2026, up 19% year over year, while diluted earnings per share under accounting standards came to 4.92 dollars. Microsoft Cloud revenue reached about 63.9 billion dollars, up 30% year over year. The figures reflect an expansion in cloud activity alongside growth in the company's overall revenue. According to the company's results, cloud revenue growth accelerated to 30% during the quarter. Microsoft's results offer one part of the positive picture among technology companies reporting in the same period.
Alphabet's Google Cloud revenue grew 103% year over year to 30.7 billion dollars in the third quarter, while revenue from Search and other advertising rose 12% to 63.3 billion dollars. But the company's net income fell to 26.17 billion dollars from 34.98 billion dollars in the same period a year earlier. Earnings per share were 2.12 dollars, affected by an 8.7 billion dollar loss on equity investments that reduced earnings per share by 55 cents. Analysts had estimated earnings per share of about 3.01 dollars. Alphabet shares fell more than 10% to 289.95 dollars in after-hours trading on October 28, despite strong growth in its cloud and search businesses.
ServiceNow reported third-quarter growth and profitability above the high end of its guidance, according to the company, and raised its full-year free cash flow margin outlook by 100 basis points to 36%. Subscription revenue was 3.988 billion dollars, up 21% year over year, while total revenue rose to 4.106 billion dollars, a 20.5% increase. The results put the company on the positive side of technology-sector earnings, contrary to what the first draft said about it missing expectations. The higher free cash flow margin target also points to an improved outlook the company announced for 2026. The available facts did not include detailed figures comparing results with analysts' estimates.
In the automotive sector, Ford said revenue was 49.5 billion dollars in the third quarter of 2026, down 2% from the same period a year earlier. Adjusted operating profit was 2.7 billion dollars, up 3% year over year, while adjusted free cash flow reached 4.7 billion dollars. The results combine a decline in revenue with an improvement in adjusted operating profit from a year earlier. The available facts did not include a verified share price or a direct comparison with analysts' estimates. The available picture of Ford's performance is therefore limited to its quarterly operating and financial results.
Attention turns on October 29 to scheduled U.S. data at 8:30 a.m., including the advance estimate of third-quarter gross domestic product growth. At the same time, the Bureau of Economic Analysis will release its September report on personal income and spending, which includes the personal consumption expenditures price index. The releases follow the Fed's decision to hold rates and come as it said inflation remained elevated and that it needed more information to determine its monetary policy stance. The spending and prices report gives the committee a reading on developments that factor into its inflation assessment, while the GDP estimate offers a picture of economic activity. Both reports are scheduled for release at the stated time on the morning of October 29.