Thursday, October 29, 2026
Alphabet Drops 13% and Drags the Nasdaq Despite a Hot 3.4% GDP Print
Key Indicators
S&P 500 (Wed close)
7,743.98
+0.28% (up)Nasdaq Composite (Wed close)
26,549.85
+0.27% (up)Dow Jones Industrial Average (Wed close)
52,475.10
+0.19% (up)S&P 500 (intraday Thu)
7,698.01
-0.59% (down)10-Year Treasury yield (intraday Thu)
4.99%
-0.06 pts (down)VIX (intraday Thu)
16.88
-0.03 (down)Crude Oil, Dec futures (intraday Thu)
$101.98
-0.78% (down)Bitcoin (intraday Thu)
$80,688
-0.30% (down)Market Recap
Wednesday's close: modest gains after the Fed holds with two hike dissents
U.S. stocks rose modestly on Wednesday, October 28, the last completed session, after the Fed held its policy rate with two dissents in favor of a hike. The S&P 500 gained 0.28% to 7,743.98, its third straight gain, the Nasdaq Composite rose 0.27% to 26,549.85, and the Dow Jones Industrial Average climbed 97.53 points, or 0.19%, to 52,475.10. U.S. markets are open today, Thursday, October 29.
Alphabet falls about 13% and pulls tech lower on Thursday
Stocks were lower in afternoon trading Thursday, with the S&P 500 near 7,698 (-0.59%), the Dow near 52,188 (-0.55%) and the Nasdaq near 26,116 (-1.64%); these are intraday readings, not closes. Alphabet fell about 13% after third-quarter results, its worst day since its 2004 IPO and roughly $500 billion of lost market value. Sales missed expectations and investors worried about free cash flow and the return on AI spending, even though Google Cloud grew 103%. Microsoft beat expectations on revenue and earnings and held up better. The Russell 2000 rose about 0.7%.
GDP beats at 3.4% and PCE inflation lands in line
Third-quarter GDP grew 3.4% annualized, above the 3.1% consensus and up from 2.2% in the second quarter, with business investment up 12.7% and consumer spending up 3.8%. September PCE inflation was in line with expectations: headline 3.6% year over year (up from 3.4%) and core 3.1% year over year, 0.3% month over month. Rate futures were pricing about an 82% chance of a 25 basis point hike in December. The 10-year Treasury yield was near 4.99%, down about 0.06 points intraday.
Oil near $102, VIX under 17, and Amazon and Intel report after the close
December WTI crude futures were near $101.98, down 0.78%, in intraday trading, with Brent near $115 earlier in the day. The VIX was 16.88. Gold was near $4,021 (-0.76%) and Bitcoin near $80,688 (-0.30%). Amazon and Intel report after the close.
Concept of the Day
Core PCE Inflation
The Personal Consumption Expenditures (PCE) price index measures how much prices for everything households buy are changing. It is the inflation gauge the Federal Reserve targets, with a goal of 2% a year. Unlike the better-known CPI, PCE accounts for people switching to cheaper goods when prices rise and covers a wider set of spending, including items paid for on households' behalf such as employer-provided health care. Core PCE strips out food and energy, which swing sharply with weather and oil markets. The idea is that the core number gives a cleaner read on underlying price pressure that is likely to persist, while the headline number shows what households actually experience. When the two diverge, the gap usually comes from energy. The Fed watches both the year-over-year rate and the monthly change, since a 0.3% monthly gain, if repeated, compounds to about 3.7% annualized. Markets react less to the level than to the surprise versus forecasts, because forecasts are already priced in.
Why it matters
September PCE landed in line: headline 3.6% year over year, up from 3.4%, and core 3.1% year over year with a 0.3% monthly gain. Both sit well above the Fed's 2% target. With GDP at 3.4% and December hike odds near 82% in rate futures, a core reading that is not cooling gives hike-leaning officials like Hammack and Cook more to point to, and it is why the report matters even when it matches forecasts.
What to Watch
Tue, Nov 3
JOLTS Job Openings
Job openings show whether labor demand is cooling enough to ease pressure for a December hike.
Fri, Nov 6
Employment Situation (October jobs report)
Payrolls and wages will shape whether the Fed sees room to hike in December.
Tue, Nov 10
Consumer Price Index (October)
A fresh inflation print after PCE at 3.6% headline will test how firmly a December hike is priced.
Wed, Nov 18
FOMC Minutes (October meeting)
The minutes will show how seriously the majority weighed the two hike dissents.