Fed holds rates steady as inflation and earnings dominate market week

The Federal Reserve concluded its two-day meeting on Wednesday by holding its benchmark interest rate steady, a move consistent with its caution regarding persistent inflation. The central bank has signaled that it may need to raise rates further to tame rising costs, with Wall Street anticipating one more hike at its December meeting.

Economic data released this week underscored the pressure on Households, with the personal consumption expenditures report showing inflation jumped to a 3.7% rate in September, up from 3.4% in August. This surge follows a global oil shortage triggered by the U.S. War with Iran, which has driven up gasoline and shipping costs while consumer confidence remains at its lowest level in over a decade.

Major technology companies including Alphabet, Intel, and Amazon reported quarterly earnings this week, offering insight into how artificial intelligence investments are influencing profits. While analysts expected profit gains, the reports provided a critical test of whether outsized stock valuations are justified as businesses navigate higher borrowing costs and sluggish third-quarter GDP growth.

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