Apple, Amazon, and GDP Await After Fed Decision

**Keith Lansford** (0:05)
Welcome to the Schwab Market Update Podcast, where we prepare you for each trading day with a recap of recent news and a look at what's ahead.
I'm Keith Lansford, and here is Schwab's early look at the markets for Thursday, July 30th. Another wave of potentially market-moving events awaits investors today, following a pivotal Wednesday that featured the Federal Reserve's latest policy decision and earnings from Microsoft and Metta. Attention now shifts to gross domestic product or GDP data and the Fed's preferred inflation gauge, the personal consumption expenditures or PCE price index due at 8:30 a.m. Eastern time. Apple and Amazon then headline another busy earnings calendar after the closing bell. The packed schedule comes as markets remain on edge after renewed U.S.-Iran tensions pushed oil prices higher on Wednesday while the sell-off in chip and AI infrastructure stocks intensified. President Trump said he will order retaliatory strikes in Iran following a surprise attack on US forces Tuesday night, breaking a multi-day pause in fighting. Oil prices surged nearly 7% after the announcement. The SIBO Volatility Index, or VIX, spiked roughly 12%.
Treasury yields also rose across the curve until the Fed decision caused short-dated yields to give up their gains and head in the other direction. Turning to the Fed, the Central Bank held rates steady at its July meeting as expected. Three officials dissented, however. The post-meeting statement noted that the dissenters would have preferred a 25 basis point rate hike. In his post-meeting press conference, Fed Chair Kevin Warsh reiterated the Central Bank's commitment to price stability. Quote, We have begun a new chapter and we understand that the five-plus years of inflation above target cannot be cured in nine weeks or by a single month of modest price decreases. End quote, he said. This Fed will not waver. After the press conference, markets plunged, leading the Dow Jones Industrial Average to post its worst day since April 2025 The chance of a rate hike at the Fed's September meeting whipsawed before ending the day at roughly 57 percent, according to the CME Fed Watch Tool. Future traders had priced in a 55 percent chance of a September hike on Tuesday. The Fed will now have until its September meeting to monitor how inflation data evolves, but upside surprises could make a hike this year more likely, said Colin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research. The risk for the Fed is that inflationary pressures, including tariffs and the AI buildout, might keep growing while it waits for more data.
While all eyes were on the Fed on Wednesday afternoon, tech earnings commanded investors' attention after the bell. Microsoft rose in early after-hours trading after topping earnings per share and revenue forecasts. Azure Cloud revenue growth impressed, rising 43% compared to the expected 39.6%.
However, Meta plunged in early after-hours trading after missing earnings estimates. The company reported $6.18 in earnings per share on revenues of $60.8 billion, compared with expectations for $7.22 in earnings per share on revenues of $60.2 billion. Meta also increased the lower end of its full-year capital expenditures guidance range to $130 billion from $125 billion, even as free cash flow dwindled to $784 million from $8.5 billion a year ago.
After the mixed earnings results from Microsoft and Meta, Apple and Amazon will be in the spotlight today. Consensus expects Apple to deliver 20 percent euro-of-year earnings per share growth, while revenues are seen rising 15 percent to roughly $108 billion. Investors will track iPhone demand, services growth, and any AI strategy updates in the report. Tim Cook's final earnings call before former hardware chief John Turner takes over the CEO role will also be closely monitored. Amazon is expected to deliver earnings per share of $1.82 on revenue of roughly $196.5 billion, marking increases of 8.3 percent and 17.2 percent euro-of-year respectively. Investors will closely be tracking Amazon Web services growth as they look for evidence of a return on investment from record AI spending. However, capital expenditures guidance and free cash flow may be the most important metrics to watch. Last quarter, Amazon's free cash flow turned negative amid its AI spending splurge. Before Apple and Amazon take center stage, today's earnings lineup will kick off with MasterCard, Shell, Anheuser-Busch InBev, Bristol-Meier Squibb and Altria before the bell. There's also plenty of economic data to parse this morning. The first estimate of second-quarter GDP growth and June's PCE price index data will likely draw the most attention. Consensus expects year-over-year GDP growth of 1.8%, which would mark a slight decrease from the first quarter's 2.1%. Anything significantly below that figure could put the Fed in a tough spot as it seeks to tame inflation without weakening the economy. PCE is seen rising 3.8% year-over-year, down from 4.1% in May. The expected slowdown in headline inflation largely reflects lower oil prices last month. With oil prices rising again, core PCE, which excludes more volatile food and energy prices, might attract more investor interest. Figures expected to match the 3.4% seen in May.