From a Fed decision to Big Tech earnings: What drove last week's volatile market
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- Federal Reserve held rates steady Wednesday, but three of 12 FOMC members voted for a hike amid inflation concerns, pushing the 10-year Treasury yield above 4.67% and the 30-year above 5.2% — its highest level since 2007.
- Dow Jones plunged 1,100+ points (2.2%) on Wednesday — its worst one-day decline since April 2025 — before recovering to finish the week up 1%, snapping a three-week losing streak.
- Situational Awareness, a leveraged hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, was forced to liquidate positions Thursday, which Jim Cramer called "one of the more sure signals to buy" as it removed indiscriminate selling pressure from the AI trade.
- Microsoft gained 21% on the week after posting $19 billion in quarterly free cash flow and maintaining disciplined capital spending, while Amazon rose 17% after raising full-year capex by $20 billion and reporting AWS's fastest revenue growth in 18 quarters.
- Meta Platforms fell more than 6% for the week after reporting a roughly 91% decline in free cash flow and softer revenue guidance, with Zuckerberg failing to convince investors of near-term AI returns.
- Apple dropped more than 7% on the week despite beating earnings expectations, as higher memory prices, supply constraints, and softer guidance overshadowed the results.
- Oil prices ended the week lower overall despite Friday gains, though renewed Iran tensions and higher energy prices contributed to inflation pressure that influenced the FOMC's hawkish dissent.
Why it matters: The week's split verdicts reveal Wall Street's new rule for AI: capex is rewarded only when paired with clear profitability signals. Microsoft and Amazon surged after demonstrating how their AI spending generates returns, while Meta's 91% free cash flow collapse and Apple's memory-cost pressures punished companies whose AI thesis lacks a near-term payoff narrative.
