Fed Holds Rates as Powell Flags Firmer Growth 29/01/2026

HOT stories for today

Market wrap:

• In Wednesday’s cash session, the S&P 500 briefly pushed above the 7,000 mark before paring gains to finish roughly flat after the Federal Reserve left its policy rate unchanged at 3.5% to 3.75%. The Dow Industrials eked out a 12-point advance, while the Nasdaq Composite added about 0.2%, supported by strength in Nvidia and Micron Technology. In its statement, the Federal Open Market Committee said data continue to point to “economic activity” expanding at a “solid” clip, with the unemployment rate showing “some signs of stabilization.”
• Even so, fed-funds futures are still pricing in two quarter-point reductions by end-2026, according to CME’s FedWatch Tool. Commodities remain in focus, with gold and silver extending record-setting runs. Investors are also gearing up for Apple’s fiscal first-quarter results due Thursday after the close. Mastercard, Caterpillar and Lockheed Martin are also slated to report. On the data docket, markets will parse weekly jobless claims, durable-goods orders, and wholesale inventories.

Fed Holds Rates as Powell Flags Firmer Growth

• The Federal Reserve on Wednesday paused its recent rate-cut campaign, holding the benchmark federal funds rate at 3.5% to 3.75% as Chair Jerome Powell pointed to a stronger growth outlook and a labor market showing signs of stabilization. The move, which met market expectations, halts three consecutive quarter-point cuts that officials had cast as insurance against a potential employment downturn. In its statement, the Fed upgraded its view of economic activity, saying growth has been “expanding at a solid pace,” while job gains remain low and the unemployment rate has shown “some signs of stabilization.” Inflation, it added, “remains somewhat elevated.” Notably, policymakers removed language suggesting labor-market risks outweighed inflation risks, signaling a more balanced read on the dual mandate and supporting expectations that the easing cycle is on pause for now. The committee offered little guidance beyond reiterating that it will weigh incoming data, the outlook, and risks in deciding the “extent and timing” of any further moves. Treasury yields ticked higher after the decision, while the S&P 500 hovered around 7,000.
• Two dissents: Governors Stephen Miran and Christopher Waller voted against holding rates, favoring another quarter-point cut. The decision comes as the Fed faces heightened political pressure and legal scrutiny, with Powell noting a Supreme Court case tied to governance issues could be among the most consequential in the institution’s history. The broader backdrop remains mixed: growth has been robust, hiring has cooled but layoffs are tame, and inflation is still running closer to 3% than the Fed’s 2% target, with tariffs seen as adding near-term price pressure.

Stocks on the move:
 

• ServiceNow (NOW): Shares fell more than 4% even after a fourth-quarter beat. Adjusted EPS was 92 cents on $3.57 billion of revenue versus LSEG estimates of 88 cents and $3.53 billion. First-quarter subscription-revenue guidance of $15.53 billion to $15.57 billion also topped forecasts. The stock is down about 15% year-to-date.
• Microsoft (MSFT): Shares dropped nearly 7% in extended trading after cloud growth slowed and operating-margin guidance came in light. Adjusted EPS was $4.14 versus $3.97 expected, with revenue of $81.27 billion topping the $80.27 billion consensus, per LSEG.
• Southwest Airlines (LUV): The stock jumped about 6% after the carrier projected at least $4 a share in adjusted 2026 earnings, above the $3.19 LSEG consensus, as it advances a business-model overhaul.
• Meta Platforms (META): Shares gained roughly 9% after results and outlook beat. Meta guided first-quarter revenue to $53.5 billion to $56.5 billion versus $51.41 billion expected. Fourth-quarter EPS was $8.88 on $59.89 billion of revenue, beating LSEG estimates, though Reality Labs posted a wider-than-expected loss.
• Tesla (TSLA): Shares rose about 3% after better-than-expected fourth-quarter results. Tesla reported adjusted EPS of 50 cents on $24.9 billion of revenue, ahead of LSEG forecasts for 45 cents and $24.79 billion. Full-year revenue fell 3%, its first annual decline on record.
• International Business Machines (IBM): Shares surged more than 7% in extended trading after IBM beat estimates. Adjusted EPS was $4.52 on $19.69 billion of revenue versus LSEG’s $4.32 and $19.23 billion. Management said its gen-AI book of business has topped $12.5 billion.

Watchlist: TSLA, META, MSFT, IBM, NOW, LUV, AAPL, MA, CAT

Key Economic Events Today:

EST time

08:30 am: USD Unemployment Claims
08:30 am: USD Trade Balance
10:00 am: USD Final Wholesale Inventories
10:00 am: USD Factory Orders

 

Earnings

BMO ( Before Market Open): Mastercard (MA), Caterpillar (CAT), SAP SE (SAP), Thermo Fisher (TMO), Honeywell (HON), Lockheed Martin (LMT)
AMC (After Market Close): Apple (AAPL), Visa (V)



The TEFS Analyst team wishes you a successful day!