Federal Reserve’s cautious tone tempers market optimism
The Federal Open Market Committee (FOMC) reduced the federal funds rate by 25 basis points, moving it to a target range of 3.75%–4.00%. In addition, the Fed announced its plan to halt the balance sheet reduction programme in December, signalling a more cautious stance moving forward.
Despite the policy action, Powell’s comments suggested a more reserved outlook on future rate cuts, prompting a rise in U.S. Treasury yields. The 10-year yield climbed to 4.07%, while the U.S. dollar gained strength against major global currencies.
US markets mixed as tech earnings drive volatility
U.S. equity markets responded unevenly following the Fed decision, with tech earnings playing a pivotal role in driving market dynamics. While many companies exceeded expectations, high valuations and mixed after-hours results led to ongoing volatility. Meta, Microsoft, and Alphabet all saw varied reactions, underscoring investor caution despite robust growth in AI and cloud computing segments.
Asia-Pacific and European markets react to trade talks and policy moves
Asian equities advanced after the Fed’s rate cut and renewed optimism around U.S.-China relations. South Korea’s KOSPI and shares of Samsung rose after a new trade agreement with the U.S., while the Japanese yen weakened following the Bank of Japan’s decision to keep rates unchanged.
European stocks trade flat amid earnings and central bank watch
In Europe, the STOXX 600 edged 0.1% lower as investors awaited the Fed’s policy outcome. Gains in banking stocks like Deutsche Bank (+5%) and Santander (+4.3%) were offset by weakness in consumer discretionary shares, including a sharp 10.4% decline in Adidas stock. Healthcare advanced, led by GSK (+6.6%), while miners and oil majors also saw modest gains. Temenos and Next led gains in other sectors.
Currency and commodity market movements
The U.S. dollar index remained above 99, supported by Powell’s cautious comments. The EUR/USD pair traded around 1.1630, reflecting broad dollar strength as traders priced in lower odds — less than 70% — for a December rate cut.
Oil prices ease on demand concerns and a stronger dollar
Oil prices dipped slightly in Asia as the stronger U.S. dollar and the Fed’s policy stance weighed on investor confidence. Brent crude declined to $64.81 per barrel, while WTI slipped to $60.31, amid ongoing concerns about global demand and oversupply.
Stocks on the move: Key corporate developments
Nvidia reached a $5 trillion market cap and received multiple analyst price target upgrades, driven by AI and data center demand. Bank of America raised its target to $275, Melius Research to $300, and DA Davidson to $250.
Alphabet beat earnings with strong ad and cloud growth. Quarterly revenue came in at $102.35 billion and adjusted EPS at $3.10. Google Cloud revenue rose 34%, and ad revenue grew 12.6%. The company raised capital expenditure guidance to $91–93 billion to support ongoing AI investments.
Microsoft posted better-than-expected profits with Azure revenue up 40%, despite capacity limitations. The company spent a record $35 billion on AI infrastructure. Total revenue grew 18% to $77.7 billion, with earnings of $3.72 per share, beating forecasts.
Meta faced an 8% share drop after a $16 billion one-time charge, despite 26% revenue growth and strong AI-driven ad performance. The company guided Q4 revenue between $56–59 billion and plans to increase AI-related spending next year.
Apple saw its price target raised to $320 by Bank of America, which maintained a Buy rating. The bank forecast 2025 revenue of $418 billion and projected EPS to rise from $7.41 in 2025 to $13.79 by 2030, supported by strong product and service growth.
Mixed results across consumer, finance, and industrial sectors
Caterpillar rose 12% after surpassing revenue and profit expectations, benefiting from AI-driven demand for industrial and energy systems. Revenue rose to $17.6 billion, with a 17% gain in its energy unit and 7% in construction. Adjusted EPS was $4.95.
Starbucks posted its first quarter of global comparable sales growth in nearly 18 months, led by 3% international growth, while U.S. sales remained flat. Margins were pressured by rising coffee bean costs and restructuring. The company is implementing price increases and continued investment in stores and labour.
Chipotle cut its 2025 sales outlook for the third time due to weak consumer demand and rising costs. Q3 comparable sales rose just 0.3%, and restaurant-level margins fell to 24.5%, sending shares down 15%.
eBay fell 8.5% after hours following a cautious profit forecast. While Q3 revenue and adjusted profit beat expectations ($2.82 billion and $1.36 per share, respectively), tariff changes and rising import costs continue to challenge cross-border trade.
CVS Health raised its 2025 profit outlook and expects double-digit earnings growth in 2026. Q3 adjusted profit beat estimates at $1.60 per share, though a $5.73 billion charge impacted net results. Pharmacy revenue rose 11.7%, helped by new Rite Aid customers.
Prudential Financial posted higher Q3 profit, with adjusted operating income rising to $1.52 billion, or $4.26 per share, up from $3.33 per share a year earlier. International operations earned $881 million, and PGIM brought in $244 million, with assets under management reaching $1.61 trillion.
Carvana reported Q3 revenue of $5.65 billion, up 54.5% year-on-year, and net income of $263 million. Shares have gained approximately 78% this year, driven by strong preowned vehicle demand and cost-saving measures.
Other noteworthy updates
Samsung reported record quarterly revenue and operating profit, driven by rising AI-related demand for memory chips. It expects demand to outpace supply and will focus on mass-producing advanced HBM chips. The company plans significant capital spending and production expansion next year, with continued supply constraints in mobile and PC memory.
MercadoLibre posted Q3 revenue of $7.4 billion, up 39%, helped by Brazil’s free-shipping initiative. Net profit came in at $421 million, below expectations, due to weaker demand in Argentina and FX headwinds. EBIT grew 30% to $724 million. Mercado Pago’s loan book rose 83%, with total payment volume up 32%.
OpenAI is preparing for a 2027 IPO, targeting a $1 trillion valuation and aiming to raise at least $60 billion. The move follows its transition to a for-profit model in partnership with Microsoft, despite posting a $13.5 billion loss in the first half of 2025.
Mastercard is reportedly in advanced talks to acquire crypto infrastructure startup Zerohash for between $1.5 and $2 billion. Zerohash provides blockchain and stablecoin infrastructure and recently raised over $100 million at a valuation above $1 billion. The deal supports Mastercard’s growing digital asset strategy.
Eli Lilly is expanding access to its weight-loss drug Zepbound by partnering with Walmart to offer retail sales at $349 per month. The move supports broader availability for self-paying customers alongside LillyDirect and telehealth services. The company is competing with Novo Nordisk’s Wegovy in the $150 billion obesity market.
Key data and corporate earnings to watch
Investors are turning their attention to upcoming economic data releases and major earnings reports that could sway market sentiment in the days ahead.
Today’s highlights include:
- Eurozone Q3 GDP data (Germany, France, Italy)
- U.S. PCE inflation and consumer spending
- U.S. jobless claims
- Germany’s inflation figures
- ECB rate decision
- U.S. mortgage rates
- Speech from a Federal Reserve official
- Earnings from Apple, Amazon, Eli Lilly, Mastercard, Schneider Electric, and S&P Global
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