Good morning. The Fed held rates on Wednesday, and stocks rose for a third straight day. Then the earnings came out. Alphabet fell 10% after hours on a rare miss and a second straight quarter of negative free cash flow, while Microsoft rose 2.9% (CNBC). Futures are split as of ~3:42 AM ET: Nasdaq-100 futures are down 1.2% and S&P 500 futures 0.4%, while Dow futures are up 0.3% (CNBC). GDP and inflation data arrive at 8:30 AM ET.
📊 THE OVERNIGHT SNAPSHOT
Stocks, VIX and yields are Wednesday's close. Futures, oil and gold as of ~3:42 AM ET Thursday, vs. Wednesday's settle; dollar index ~3:52 AM ET. Crypto as of ~3:52 AM ET vs. its 24-hour open. Nikkei and Kospi are Thursday's close; Hang Seng is live in Thursday's session, ~3:37 AM ET. Stoxx 600 is Wednesday's close.
One-line read: A quiet Fed day, then a loud after-hours: Microsoft's cloud delivered, Alphabet's cash flow did not, and Nasdaq futures followed Alphabet.
Market | Last | Change |
|---|---|---|
S&P 500 futures | 7,752.75 | ▼ 30.50 pts (−0.39%) |
Nasdaq-100 futures | 29,607.00 | ▼ 372.50 pts (−1.24%) |
Dow futures | 52,847 | ▲ 151 pts (+0.29%) |
S&P 500 | 7,743.98 | ▲ 0.28% (+21.38) |
Nasdaq Composite | 26,549.85 | ▲ 0.27% (+72.04) |
Dow | 52,475.10 | ▲ 0.19% (+97.53) |
Russell 2000 | 2,830.51 | ▲ 0.41% (+11.64) |
Chip index (SOX) | 11,684.00 | ▲ 1.75% (+201.50) |
VIX | 16.91 | ▼ 0.61 pts |
US 10Y yield | 5.05% | ▲ 6 bp |
US 2Y yield | 4.67% | ▼ 3 bp |
WTI oil (Dec) | $101.94 | ▼ 0.8% (vs. $102.78 Wed settle) |
Brent oil (Dec) | $114.85 | ▼ 0.4% (vs. $115.32 Wed settle) |
Gold (Dec) | $4,040.20 | ▼ 0.28% (vs. $4,051.60 Wed settle) |
Dollar index (DXY) | 102.17 | ▼ 0.02% |
Bitcoin | $79,760 | ▼ 1.5% |
Ether | $2,304 | ▼ 2.3% |
Nikkei 225 (Thu close) | 64,659.47 | ▲ 1.10% (+705.28) |
Kospi (Thu close) | 5,937.66 | ▼ 1.24% (−74.78) |
Hang Seng (Thu, live) | 22,997.74 | ▼ 0.42% (−97.09) |
Stoxx 600 (Wed close) | 644.14 | ▲ 0.07% (+0.46) |
🌙 WHAT HAPPENED WHILE YOU SLEPT
Alphabet Burned Cash. Microsoft Didn't.
Alphabet shares fell 10.0% to $292.50 in after-hours trading Wednesday after the Google parent missed Wall Street's forecasts for both revenue and profit for the first time in nearly four years (CNBC). Revenue rose 25% to $127.58 billion, short of the $128.22 billion analysts expected, and adjusted earnings were $2.67 a share against $3.02 expected (Alphabet; CNBC). The bigger number was cash: free cash flow was negative $9.07 billion, worse than the negative $2.70 billion analysts expected, after the company spent $51.36 billion on property and equipment in three months (Alphabet; CNBC). Microsoft went the other way, up 2.9% after hours to $546.30, after Azure revenue grew 48% to $33.17 billion, ahead of the $32.84 billion Visible Alpha estimate (Microsoft; Reuters; CNBC). "Investors need to see search accelerating, not decelerating," said Dave Wagner of Aptus Capital Advisors (Reuters).
The numbers: Google Search and other revenue was $63.35 billion, below the $64.96 billion expected, and ad revenue of $82.01 billion was about $1.4 billion short of estimates (Alphabet; Reuters). Google Cloud revenue more than doubled, up 103% to $30.71 billion (Alphabet). Alphabet kept its 2026 spending plan of $195 billion to $205 billion and said 2027 spending will "increase significantly" (CNBC). Its long-term debt is now $125.1 billion, up from $21.6 billion a year earlier (Alphabet). At Microsoft, revenue rose 19% to $92.28 billion against $90.69 billion expected, and adjusted earnings were $4.89 a share against $4.73 (Microsoft; LSEG via CNBC). Microsoft also spent heavily, $39.37 billion on property and equipment, about double a year earlier, but its operating cash flow of $58.0 billion covered it, leaving about $18.6 billion of free cash flow (Microsoft; our math).
Why it matters: Alphabet and Microsoft are two of the largest holdings in most S&P 500 and Nasdaq-100 funds, so an after-hours move this size reaches a lot of retirement accounts. Together they spent about $90.7 billion on capital projects last quarter (our math). Wednesday's message from investors: spending is fine when the revenue shows up next to it, as Azure's did, and harder to accept when the core business slows. Alphabet was worth about $3.9 trillion at Wednesday's close (CNBC); a 10% drop that holds would erase about $390 billion of market value (our math).
What to watch: As of ~3:42 AM ET, Nasdaq-100 futures are down 1.24% and S&P 500 futures 0.39%, while Dow futures are up 0.29% (CNBC). In the regular session, the S&P 500 rose 0.28% to 7,743.98, the Nasdaq 0.27% to 26,549.85 and the Dow 0.19% to 52,475.10, all third straight gains (Reuters; CNBC), though the equal-weight S&P 500 slipped 0.03% (CNBC). The S&P 500 is 0.96% below its Oct. 6 record (FRED; our math). One company's cash flow statement moved futures more than the Fed did.
🔑 3 THINGS TO KNOW BEFORE THE OPEN
1. The Fed held, but two officials wanted a hike.
The Federal Reserve kept its target range at 3.75%–4.00% in a 10–2 vote. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented in favor of a quarter-point increase (Federal Reserve). The statement said "economic activity is expanding at a strong pace" and "inflation remains elevated" (Federal Reserve). Chair Kevin Warsh also said one of the Fed's eight meetings in 2027 will be a strategy-only session with no rate vote, and 2028 is planned with two strategy meetings and six policy meetings (CNBC). Traders now see an 85.0% chance of a December hike, up from 78.3% on Tuesday (CME FedWatch via Reuters). "Nothing from today rules out another 25 bp hike before year-end," wrote Franklin Templeton's Jeff Schulze (CNBC). Treasury yields went two directions: the 2-year fell 3 bp to 4.67% while the 10-year rose 6 bp to 5.05%, its highest close since Oct. 21 (US Treasury). The gap between them widened to 38 bp from 29 bp, the biggest one-day widening since July 29 (US Treasury; our math). Overnight the 10-year is at 5.00% (CNBC, ~3:52 AM ET). The Bank of Canada raised its rate a quarter point to 2.50% and said it may need to go further (Bank of Canada).
Why it matters: The 10-year yield sets the tone for mortgage rates. Freddie Mac's 30-year average is 7.32%, with a new reading due today (Freddie Mac via FRED), and the Mortgage Bankers Association's rate eased to 7.37% from 7.41% (CNBC).
2. GDP and inflation land at 8:30 AM ET.
The government releases its first estimate of third-quarter GDP and September personal income and spending, including PCE inflation, the Fed's preferred gauge, at 8:30 AM ET (BEA). Economists expect growth of 3.2% at an annual rate, up from 2.2% in the second quarter, and PCE inflation of 3.7% from a year earlier, up from 3.4% (WSJ survey; FRED). Core PCE, which leaves out food and energy, is expected at 3.1%, from 3.0% (WSJ survey; FRED). Weekly jobless claims are due at the same time; economists expect 200,000, from 194,000 (WSJ survey; Labor Department via FRED). The European Central Bank also announces its rate decision today (ECB), and Treasury sells $44 billion of 7-year notes at 1:00 PM ET (US Treasury).
Why it matters: Two Fed officials already voted for a hike. A hot PCE number would make December's 85% look more like a done deal; a soft one gives the other ten more room to wait.
3. Amazon and Intel report tonight.
Amazon and Intel report after the close, and Caterpillar and Eli Lilly report before the open (CNBC). Analysts expect Amazon revenue of $202.22 billion and growth of 37.8% at its cloud unit, AWS (FactSet via CNBC). Amazon is the last of the big cloud companies to report this week, after Microsoft and Alphabet on Wednesday. With 200 S&P 500 companies reported, 84% have beaten profit estimates, and third-quarter earnings growth is now estimated at 31.8%, up from 30.6% on Oct. 1 (LSEG via Reuters).
Why it matters: After Wednesday, investors will read Amazon's results the same way: is the cloud revenue growing fast enough to pay for the spending?
📈 CHART OF THE DAY
Alphabet spent more cash than it made. Again. Alphabet spent $51.4 billion on capital projects in the third quarter, more than five times the $9.8 billion it spent in early 2022 and more than double the $24.0 billion of a year ago (Alphabet; SEC filings; our math). Its operating cash flow is still large, $42.3 billion last quarter, but no longer large enough: free cash flow was negative for a second straight quarter, at −$9.1 billion after −$5.9 billion in the second quarter (Alphabet). Reuters reports the second quarter was Alphabet's first negative quarter in 22 years as a public company. For context, over the last 12 months free cash flow is still positive, at $19.7 billion (Alphabet).
Source: Alphabet 10-Q and 10-K filings via SEC XBRL data (Q1 2022–Q2 2026); Alphabet Q3 2026 earnings release, Oct. 28, 2026. Free cash flow = operating cash flow minus capital spending. Quarterly splits: our math.
⚡ QUICK HITS
Earnings: Oracle rose 10.7% after forecasting $225 billion in fiscal 2030 revenue, implying 35% average annual growth, capping new fundraising at $20 billion and saying its free cash flow will turn positive in the second half of fiscal 2028 (CNBC). Vertiv gained 16.5% after beating forecasts and issuing stronger-than-expected guidance, and Wingstop and Chili's owner Brinker each rose about 12% (CNBC). F5 fell 20.4% after its fiscal 2027 outlook and a Piper Sandler downgrade (CNBC).
After hours: ServiceNow fell 18.1% after earnings of $1 a share missed the $1.02 expected, Fortinet 25.7% on a lower-than-expected gross margin and Sprouts Farmers Market 23.0% (CNBC, quotes ~7:59 PM ET). Chipotle rose 7.0% after same-store sales grew 2.1% against 1.5% expected, and Carvana 8.3% after the SEC closed its investigation (CNBC). Ford slipped 1.0% despite beating on earnings, and FedEx fell 2.1% even after raising its full-year revenue growth outlook to 12% (CNBC). Lumentum rose 8.7% and Marvell fell 8.4% after Bloomberg reported Marvell is in talks to buy Lumentum (CNBC).
Chips: The chip index rose 1.75% for a fourth straight gain (Reuters; CNBC). Micron gained 5.9%, AMD 3.2% and Broadcom 2.8%, while Nvidia slipped 1.2% (CNBC).
Oil: US crude (WTI) settled up 2.9% at $102.78 and Brent up 1.3% at $115.32 (CNBC). The Wall Street Journal reported that the US told several Gulf countries to be ready for a short but intense military campaign after the midterm elections (CNBC). US crude stocks fell 1.9 million barrels last week to 410.6 million; analysts polled by Reuters expected a small rise (EIA via Reuters). Overnight, WTI is down 0.8% at $101.94 (CNBC, ~3:42 AM ET), as investors latched onto hopes that Middle East peace talks could be back on the table (Reuters).
Asia: Seoul's Kospi closed down 1.2% on Thursday, a day after its 6.6% jump, and Japan's Nikkei closed up 1.1% (CNBC). Samsung shares fell 4% after record earnings because it was silent on plans to boost shareholder returns, while Japan's Advantest gained after raising its full-year operating profit forecast by 14% (Reuters).
Europe: The Stoxx 600 edged up 0.07% Wednesday, and Germany's DAX gained 0.44% (Yahoo Finance). Before Thursday's open, pan-European stock futures were up 0.2% (Reuters).
Crypto: Bitcoin is near $79,760 as of ~3:52 AM ET, down 1.5% from its 24-hour open, and Ether is near $2,304, down 2.3% (Coinbase).
Wildcard: Wendy's jumped 15.2% after Nelson Peltz's Trian proposed taking the burger chain private for $1.4 billion, according to a regulatory filing (CNBC). Where's the beef? Apparently in the bid.
🧠 EXPLAIN LIKE I'M BUSY
What is "free cash flow," and how did Alphabet's go negative?
Free cash flow is the cash a company brings in from running its business, minus what it spends on long-lasting things like data centers, chips and buildings. It is the money left over to pay dividends, buy back stock or save. Alphabet's business still produced $42.3 billion of cash last quarter, but it spent $51.4 billion on property and equipment such as data centers and servers, so the leftover was negative $9.1 billion (Alphabet). Companies can do this for a while by borrowing or using savings; Alphabet's long-term debt has grown to $125.1 billion from $21.6 billion a year ago (Alphabet). A negative quarter is not a loss. Alphabet still earned $26.2 billion in profit (Alphabet). It means the company is betting today's cash on tomorrow's revenue, and Wednesday showed how closely investors are now checking the bet.
🗓️ TODAY'S CATALYSTS (ALL TIMES ET)
Day | Event | Why it matters |
|---|---|---|
Thu Oct 29 | Q3 GDP (advance) and September personal income, spending and PCE inflation, 8:30 AM (BEA); weekly jobless claims, 8:30 AM (Labor Department) | Growth and the Fed's preferred inflation gauge. |
Thu | Caterpillar and Eli Lilly before the open (CNBC); ECB rate decision (ECB) | Industrial demand, weight-loss drugs, global rates. |
Thu | 4-week and 8-week bill auctions, 11:30 AM; $44 billion 7-year note auction, 1:00 PM (US Treasury) | Demand for longer-term Treasurys with the 10-year above 5%. |
Thu | Freddie Mac weekly mortgage rate (Freddie Mac) | Last reading 7.32%. |
Thu | Amazon and Intel after the close (CNBC) | The last big cloud report of the week; AI chips. |
Fri Oct 30 | Employment Cost Index (Q3), 8:30 AM (BLS); Chicago PMI, 9:45 AM (WSJ calendar); Bank of Japan decision (CNBC) | Wage growth, a key Fed input. |
Tue Nov 3 | US midterm elections (Reuters) | Policy backdrop for markets. |
Wed Nov 11 | Veterans Day: bond market closed (SIFMA); stock market open (NYSE) | No Treasury trading that day. |
Thu Nov 26 | Thanksgiving: stock and bond markets closed (NYSE; SIFMA) | Holiday-shortened week. |
No market holidays this week: NYSE and SIFMA are both on normal hours through Friday.
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That's the desk. See you tomorrow at 6 AM ET.
— The Overnight Desk Team
Note: The Overnight Desk Team may hold positions in assets discussed. Nothing here is investment advice. · Sponsor: No one paid for any mention in this issue.
