07/30/26

Here's what's going on in the stock market. So good morning. Yesterday was a Fed day for the record books. The Fed did exactly what everyone expected. They did not move rates. But the market sold off hard anyway. Here's what happened and the market today. So the Fed held interest rates steady, but the vote was 9 to 3 and those three no votes were Fed officials that actually wanted to raise interest rates. That was a louder inflation warning than investors were expecting. And it told the market that a rate hike or a rate hike or a rate truly is on the table. And it's likely if inflation doesn't make some real progress soon. Kevin Warsh's press conference didn't do very much down investors. In fact, it kind of fanned the flames. We are no longer getting forward guidance, aka hints about what the Fed thinks the future will look like. And that's creating some additional uncertainty that I talk about more on the Bell Club website and in my newsletter today. So stocks buckled almost immediately. The Dow had its worst day since April of last year, down almost 2.2%. And the tech heavy Nasdaq 500 were both down and a half. Bond yields or the interest rates that investors have to get paid in order to be convinced to buy treasury bonds, those rates jumped as investors demanded more return in order to protect their investment against inflation. The 30 year treasury rate hit its highest level in 19 years, piling on to all of this. Oil jumped about 7% on increasing Middle East tensions, which only adds to the inflation worry since energy prices feed into almost everything. Now let's talk about earnings, starting with Meta and Microsoft. The two big AI spenders reported earnings after the close and they got completely opposite reactions. So first, the winner, Microsoft. It beat expectations across the board with revenue up 18%. The star was its mentioned that investors would be watching Azure. It grew 43% and crossed $100 billion in annual revenue. Why does that matter? Because it's proof that all of Microsoft's massive AI spending is actually turning into real paying customers. Also, its AI assistant, Copilot, now has more than 30 million paid subscriptions. The company said that they will continue to spend aggressively, but they have some real revenue to show for it. The stock is up over 9% in pre-market this morning. Now on the other side, Meta. Meta is spending just as aggressively on AI infrastructure. It raised its spending plan to as much as $145 billion. But investors hated the reports. Meta's profit missed expectations and its free cash flow, the spare cash it has left after spending, collapsed 91%. Now the difference from Microsoft is that Meta can't yet show where all of that spending has turned into new revenue. The payoff is still mostly a promise. Now Meta said that AI is part of their ad revenue increased by more than 27%, but social media ads are a growing segment. So I think investors wonder how much of that growth would have still shown up even without all of the AI spending. My guess is probably a lot of it. The stock is down over 9% in pre-market right now because investors need real revenue receipts now. One bright spot away from all of the AI drama. Starbucks delivered its strongest quarter in years with same store sales up nearly 8% to sign that its turnaround is actually working. This morning futures are pointing to a modest bounce. We will get the first read on how fast the economy grew last quarter, plus the Fed's favorite inflation gauge. We have tons of earnings and after the close, two more giants, Apple and Amazon reports. Another huge afternoon. For even more detail, check out the Bell Club website or my daily newsletter.