Stocks Dip on Mixed Microsoft, Alphabet, PCE Data
Published as of: October 29, 2026, 9:15 a.m. ET
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| The markets | Last price | Change | % change |
|---|---|---|---|
| S&P 500® Index | 7,743.98 | +21.38 | +0.28% |
| Dow Jones Industrial Average® | 52,475.10 | +97.53 | +0.19% |
| Nasdaq Composite® | 26,549.85 | +72.04 | +0.27% |
| 10-year Treasury yield | 5.01% | -0.03 | -- |
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| Cboe Volatility Index® | 17.07 | +0.16 | +0.95% |
| Gold | $4,038 | -$16.80 | -0.41% |
| WTI Crude Oil | $101.33 | -$1.43 | -1.37% |
| Bitcoin | $80,000 | -$1,525 | -1.87% |
(Thursday market open) Investors might feel like they're drowning in data and earnings and today won't throw them a life jacket. Instead, it began with the September Personal Consumption Expenditures (PCE) price index that came in just as Wall Street expected at 3.6% on an annual basis and 3.1% for core excluding food and energy.
"This is still elevated and too high for the Fed's liking," said Cooper Howard, director of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). "For the Fed, I think it means that December is very much in play. The economy is strong, the labor market is resilient, and inflation is high, which all point to the Fed needing to tighten further."
The Federal Reserve's 10-2 vote to pause rates yesterday drew little market reaction as stocks finished mostly higher, led by tech. Fed Chairman Kevin Warsh declined to hint where rates are headed but noted it's an "information rich" environment—meaning data and other events could shape the next move. Tech crumbled early today after a dramatic miss from Alphabet (GOOGL), where heavy capital expenditures took a large bite out of free cash flow. Microsoft's (MSFT) results impressed and Amazon (AMZN) reports later.
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Three things to watch
- GDP/PCE deeper dive: In addition to PCE, investors eyed the government's first estimate of third quarter gross domestic product (GDP). "GDP was the bright spot, up 3.4% vs. 3.2% expectations, driven mostly by personal consumption," Howard said. Though consumption rose on a nominal basis, spending softened in real terms, coming in flat. This suggests consumers are spending more for the same or less output. GDP, calculated on a seasonally adjusted annual basis, rose from 2.2% in the second quarter. The GDP chain deflator, which measures price increases across the economy for domestically produced goods, rose 2.2%, less than the 3.5% Briefing.com consensus and far below the 6.1% second-quarter increase. Digging in more, PCE rose 0.5% and core PCE rose 0.3% monthly, both meeting analysts' estimates. Core growth was the same as in August, but headline rose from August's 0.3%, while annual numbers rose from August's 3.4% and 3%. Energy prices drove headline PCE growth, no surprise considering crude's strength. On an annual basis, goods PCE rose 3.9% year over year and services rose 3.5%. Under the surface, about 48% of the subcomponents of PCE are still rising at 3% or more.
- Alphabet and Microsoft earnings assessed: Microsoft topped analysts' expectations for both earnings per share and revenue. Diving deeper, cloud revenue rose 30%, topping the Street's estimate, while Azure revenue surged 49%, well above expectations. Free cash flow fell year- over-year but easily surpassed Wall Street's estimates. Shares gained nearly 1.5% before the open but felt pressure from overall tech weakness after initially jumping 4%. It was a tough quarter for Alphabet as earnings per share of $2.12 fell well short of the $3.01 consensus and Search revenue and YouTube ad revenue both missed estimates. The miss on Search—which came as more queries were directed to "AI mode," Alphabet said—raised concerns about AI hurting Alphabet's key product. Google Cloud revenue of $30.7 billion rose 103% annually, beating estimates. Results—which included negative free cash flow exceeding $9 billion and a prediction that capital expenditures would rise again next year—appeared to make investors question Alphabet's return on invested capital, while Microsoft's quarter triggered positive thinking on that metric. Alphabet's 11% plunge reverberated through the AI sector early today as the Nasdaq-100® (NDX) fell more than 1%.
- Amazon on deck: AI demand and monetization will likely be in focus again when Amazon reports after today's close, rounding out the biggest three cloud firms. Earnings per share consensus is $1.97, with expected revenue of $202.3 billion up 12.3% annually. Company-specific factors include advertising revenue growth, which jumped 26% annually last quarter, custom AI chip adoption as Amazon expands its chip business, and core e-commerce growth. Online store net sales rose 15% year over year the previous quarter. Amazon remains the cloud leader, but over the past few years both Microsoft and Alphabet have gained share. Amazon Web Services cloud sales rose 37% year-over-year in the second quarter, the unit's fastest growth since 2021, and Amazon said then it expects capital spending of $220 billion this year, CNBC reported. Any rise today might draw concern as AI spending worries continue to embroil Wall Street. Investors seem intent on finding a spending sweet spot indicating the AI buildout continues but not at a pace that would cause undue financial stress for companies involved.
Crypto currents
Bitcoin resistance, reduced volatility: Bitcoin has pierced $85,000 three times over the past month, only to reverse directions, and the cost basis of many long-term holders offer clues as to why. About 4 million bitcoin—around 20% of the total supply—was bought at $85,000 or higher, with most bought in 2025, according to Glassnode data. So after waiting a year or more for a price recovery, many of those long-term holders may be happy to sell at break-even, providing resistance to additional gains. The average cost basis of active investors, on the other hand, sits just below $78,000, potentially providing short-term resistance if previous buyers decide to defend that price level. Meanwhile, volatility has hit a long-term low. A Glassnode gauge of the size of daily price moves has hit the lowest level in more than three years.
On the move
- With few exceptions, chip and AI-related names fell early, in part due to Alphabet's descent but also on signs of Oracle (ORCL) and Microsoft reining in capital expenditures. Microsoft's capex for the quarter came in at $45.2 billion, below the $50 billion consensus.
- Oracle (ORCL) rose almost 11% Wednesday before falling slightly today. It plans to limit additional capital expenditure increases through fiscal year 2030 to $20 billion, excluding refinancing of existing debt, Barron's reported. Oracle also said it plans to be cash-flow positive during the second half of fiscal 2028. All this points to more disciplined AI spending.
- A 4% drop in Samsung shares in South Korea earlier today also weighed on tech, though quarterly results from the company impressed.
- Marvell Technology (MRVL) skidded almost 12% and Lumentum (LITE) rose 6% after Bloomberg reported late Wednesday that Marvell is in advanced talks to buy Lumentum, a data center optics maker. A deal could be announced as soon as next week.
- ServiceNow (NOW) tumbled almost 20% after missing analysts' estimates for earnings per share, though quarterly revenue met expectations.
- Other software shares also fell in the wake of those results and on renewed concerns about competition from AI. Z Scaler (ZS) fell 7%. Crowdstrike (CRWD) and Palo Alto Networks (PANW) each fell more than 6%.
- Neocloud firms CoreWeave (CRWV) and Nebius (NBIS) both slipped more than 6% on concerns about tight financial conditions for companies spending heavily on the data center buildout.
- Caterpillar (CAT) toppled 9% despite topping consensus on earnings per share and hitting analysts' revenue estimates. However, it kept its annual revenue growth forecast unchanged, disappointing investors grown used to major gains driven by AI-related construction needs.
- Chipotle (CMG) rallied more than 7% early even though it missed Wall Street's earnings estimates. Sales at stores open a year or more rose for the third straight quarter.
- FedEx (FDX) slipped almost 1% after quarterly results topped expectations despite high energy prices and the delivery firm raised guidance. Pricing power appeared to improve.
- Instacart (CART) climbed nearly 5% as CNBC said a deal is near for it to be bought by DoorDash (DASH), shares of which rose almost 7%.
- Eli Lilly (LLY) added 4% early after earnings and revenue easily surpassed analysts' consensus, led by demand for weight-loss drug Zepbound and diabetes drug Mounjaro. The company also raised its 2026 revenue guidance. The health care sector appeared strong this morning as Merck (MRK) also topped estimates and raised guidance.
- Norwegian Cruise Line (NLCH) climbed nearly 11% as earnings and revenue both beat consensus, though its guidance for fourth quarter earnings per share was below estimates. Bookings for the next 12 months have improved modestly but remain below the optimal range, the company said.
- Ford (F) slipped almost 2% despite quarterly results topping Wall Street's estimates. The company said it faces "significant commodity cost increases."
- Overall earnings have been strong to date, with 81% of companies reporting exceeding consensus expectations for earnings per share.
More insights from Schwab
FOMC recap: Get Schwab experts' view of yesterday's Fed meeting and thoughts on Fed Chairman Warsh's comments in our new look at monetary policy.
A crypto paradox: Jevons Paradox helps explain how lower blockchain costs may boost adoption—and why token value depends on usage growth outpacing supply. Learn more in the latest Schwab cryptocurrency analysis by Jim Ferraioli, director of digital currencies research and strategy at SCFR.
The long and short of it: The latest Schwab Short Interest Monitor shows short sellers targeting a tech-heavy mix of companies, including two major neocloud companies CoreWeave (CRWV) and Iren Limited (IREN).
Chart of the day
Data source: FTSE Russell. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
The Russell 2000® small-cap index (RUT—candlesticks) may have found its footing after falling about 13% from mid-August through mid-October. It has risen more than 3% over the past two weeks, breaking through the downward sloping trendline (white line), but the falling 50-day moving average (red line) looms as overhead resistance.
The week ahead
October 30: BoJ rate decision and expected earnings from ExxonMobil (XOM), AbbVie (ABBV), Chevron (CVX), BP (BP), Sanofi (SNY), and General Dynamics (GD).
November 2: September construction spending, October ISM Manufacturing PMI®, and expected earnings from Apple (AAPL), Palantir (PLTR), Marriott International (MAR), Entergy (ETR), Idexx Labs (IDXX), Estee Lauder (EL), Vertex Pharmaceuticals (VRTX), Diamondback Energy (FANG), On Semiconductor (ON), and Roku (ROKU).
November 3: September factory orders and expected earnings from Advanced Micro Devices (AMD), Shopify (SHOP), Pfizer (PFE), Amgen (AMGN), Eaton (ETN), Marathon Petroleum (MPC), Arista Networks (ANET), Booking Holdings (BKNG), Block (XYZ), and American International Group (AIG).
November 4: October ISM Services PMI® and expected earnings from McDonald's (MCD), Uber (UBER), Novo Nordisk (NVO), CVS Health (CVS), Datadog (DDOG), Arm Holdings (ARM), Qualcomm (QCOM), McKesson (MCK), AppLovin (APP), Motorola (MSI), DoorDash (DASH), and Allstate (ALL).
November 5: Third quarter productivity-preliminary, and expected earnings from ConocoPhillips (COP), Sony Group (SONY), Southern (SO), Duke Energy (DUK), Cloudflare (NET), Airbnb (ABNB), Monster Beverage (MNST), and Lumentum (LITE).