Markets Fall After Fed, Microsoft's AI Revenue Growth Restores Optimism
Microsoft's 43% Cloud Revenue Growth Lifts Futures, While Fed Holds Rates and Meta Loses Liquidity.
Microsoft's 43% Cloud Revenue Growth Lifts Futures, While Fed Holds Rates and Meta Loses Liquidity.
On Wednesday, July 29, 2026, Wall Street experienced a sharp decline after the U.S. central bank (Fed) kept its key interest rate in the range of 3.5% to 3.75%, as data from Lider shows. Although the majority of Federal Open Market Committee members supported the decision, three voted for a 25 basis point increase. The Dow Jones index plunged 2.19% to 51,594 points, the S&P 500 lost 1.52% closing at 7,316 points, while the Nasdaq fell 1.74% to 24,442 points. It was the lowest level for the S&P 500 in a month, and the Nasdaq was nine percent below its June record.
Following the Fed meeting, analysts pointed to growing concerns. "The Fed held its course, as expected. Now the bigger question is how much pressure it will be under to raise rates in September. Inflation is red-hot, and with rising crude oil prices, the market expects a rate hike in September," said Ryan Detrick, an analyst at Carson Group, for Lider.
After the markets closed, two tech giants reported their quarterly results. Meta Platforms reported a drastic decline in cash flow, which plunged 91% compared to the same period last year, to just $784 million, while a year ago liquidity stood at $8.55 billion. Meta's stock fell 5% in electronic trading.
In contrast, Microsoft showed that large investments in artificial intelligence are paying off. According to a Twitter post, the company reported revenue of $90 billion in the fourth fiscal quarter of 2026, with Azure and other cloud services revenue growing 43%. Net profit increased about 30% to $35.77 billion. Capital expenditures and finance leases rose 69% to $41 billion, but liquidity fell 23% to $19.64 billion. The stock price jumped 8% in electronic trading.
Microsoft CEO Satya Nadella said via Twitter:
We are advancing the frontier on the cost-to-outcome curve, ensuring every customer can turn tokens into business results. This year, Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million seats, reflecting the confidence customers are placing in us to power their AI transformation.
Thus, in the full fiscal year 2026, Microsoft achieved a record $331 billion in revenue, of which Microsoft Cloud accounted for $214 billion, and Azure surpassed $100 billion in annual revenue for the first time. Paid users of Microsoft 365 Copilot exceeded 30 million.
South Korea's Samsung Electronics reported record operating profit in the second quarter, at $61.7 billion, a surge of 1,814% compared to last year, and revenue rose 130% to $118.7 billion, largely due to demand for AI chips, according to Lider. The stock rose 1.6% this morning.
However, Asian AI-related stock markets remain under pressure. During the week, a massive sell-off in the South Korean market erased more than $2,000 billion in value. The Kospi index fell 1.72% on Thursday and is down 13% on a weekly basis. Japan's Nikkei rose 2%, but also records a weekly decline of 3%, and the MSCI Asia-Pacific index weakened 0.49%, reports Lider.
European markets traded cautiously: Frankfurt's DAX stagnated at 25,460 points, London's FTSE rose 0.34% to 10,908 points, and Paris's CAC fell 0.6% to 8,408 points.
In forex markets, the dollar index strengthened 0.1% to 100.89 points. The dollar exchange rate against the euro rose 0.13% to 1.145 euros, and against the yen 0.07% to 163.49 yen. Bitcoin, according to CoinDesk, traded near $63,900 on Thursday, tracking movements in AI and chip-related stocks rather than crypto-specific news.
On Thursday morning, futures on U.S. indexes rose, encouraged by Microsoft's results. S&P 500 futures jumped 0.2%, and Nasdaq 100 futures 0.4%. Microsoft's stock was up 8% in pre-market trading, giving investors hope that massive investments in artificial intelligence are starting to pay off.
