Fed Holds Rates, AI in Focus for Tech Earnings, More
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What is the main topic discussed in this episode?
News when you want it with Bloomberg News Now. I'm Doug Krisner. The Fed left interest rates unchanged today in a move that was widely expected.
Why did the Fed decide to hold interest rates steady?
Policymakers pointed to improvement in the American economy and the job market. Here is Chair Jay Powell.
The U.S. economy expanded at a solid pace last year and is coming into 2026 on a firm footing. While job gains have remained low, the unemployment rate has shown some signs of stabilization, and inflation remains somewhat elevated.
And as a result of those points, the Fed signaled a more cautious approach to potential future adjustments in interest rates. Now, today's decision comes as the Fed faces pressure from the Trump administration. There is a criminal investigation regarding improvements to the Fed's headquarters and the Supreme Court case over President Trump's attempt to remove Fed Governor Lisa Cook. Powell stressed the importance of Fed independence.
Every advanced economy democracy in the world has come around to this common practice. It's just an institutional arrangement that has served the people well. And that is to have a separation between, to not have direct elected official control over the setting of monetary policy. And the reason is that monetary policy can be used through an election cycle to affect the economy in a way that will be politically worthwhile.
That is Fed Chair Jay Powell. We move to earnings news next. Tesla's profit for the latest quarter beat analyst expectations. Now, this would suggest the company is making progress toward overcoming rising cost and dealing with an end to those U.S. tax incentives for electric vehicles. Later, in a call with analyst Tesla CEO Elon Musk said the company will discontinue the Model S and X vehicles.
It's time to basically bring the Model S and X programs to an end with an honorable discharge because we're really moving into a future that is based on autonomy.
That was Tesla CEO Elon Musk. At the same time, Tesla announced plans for artificial intelligence. The company is planning to invest $2 billion into Elon Musk's AI company, XAI. We also heard after the bell from Meta Platforms, The company reported earnings for Q4 above analyst estimates, and Meta raised guidance for the current quarter. Meta said its robust advertising business is making it possible for the company to invest in AI at record levels. We got reaction from John Belton, Managing Director for Growth Portfolios at Gabelli Funds.
Meta's headline numbers are a really interesting reflection of the market's attitude towards this right now because their CapEx and OpEx guides for 2026 were both way ahead of even some of the higher estimates I'd seen out there.
John Belton there from Gabelli Funds. Shares in Meta were up 9% in late U.S. trading. We also heard from Microsoft. Earnings and revenue for the latest quarter both came in above estimates. However, Microsoft's growth in cloud sales seemed to slow.
What are the implications of Fed Chair Jay Powell's comments on economic stability?
Here is Microsoft VP and CFO Amy Hood.
In Azure, we expect Q3 revenue growth to be between 37% and 38% in constant currency against a prior year comparable that included significantly accelerating growth rates in both Q3 and Q4. As mentioned earlier, demand continues to exceed supply, and we will need to continue to balance the incoming supply we can allocate here against other priorities.
That is Amy Hood, Microsoft Vice President and CFO. Tomorrow, after the closing bell, we'll get quarterly results from Apple. We have a preview from Bloomberg's Tom Busby.
apple is poised to deliver its biggest sales quarter ever thanks in large part to expected blowout sales of its iphone 17 lineup especially for the higher end models but investors are still concerned about rising costs for components especially memory chips and what sales look like in china which declined just three months ago bloomberg consensus calls for revenue to jump 11 higher to 138.4 billion dollars the biggest quarterly growth in four years on earnings per share of $2.68. Tom Busby, Bloomberg Radio.
The FBI searched the election office of Fulton County, Georgia, seeking records related to the 2022 election.
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