The Fed decision is in, and U.S. stocks closed mixed once again. The broader market posted gains for a third consecutive trading day, while tech giants went in opposite directions after reporting earnings: Microsoft surged in after-hours trading, while Google parent Alphabet tumbled.
The market’s focus is rapidly shifting from whether interest rates will move to whether companies can generate real profits, how long it will take to recoup their AI investments, and whether their free cash flow is truly healthy.
On October 29, U.S. Eastern Time, the Federal Reserve announced that it would keep its target interest rate range at 3.75% to 4.00%. Although the announcement cleared up some near-term uncertainty, standing pat does not mean a rate-cut cycle is underway. Financing costs for businesses and the underlying valuations of stocks remain under pressure. What will really move markets next are upcoming inflation and employment data, as well as comments from Fed officials.
Why are Microsoft and Google diverging so sharply? Markets are increasingly focused on cash flow
The stark contrast between Microsoft and Alphabet after their earnings reports reflects a profound shift in how technology stocks are being evaluated: markets are no longer satisfied with stories about AI growth—they also want to see whether the enormous sums being invested can deliver tangible returns.
Microsoft’s latest quarterly results showed Azure cloud revenue surging 48% year over year and free cash flow climbing to about $18.6 billion. Its better-than-expected cash-generating ability pushed its shares up more than 3% after hours.
Alphabet, meanwhile, faced a different test. Growth in core search advertising fell short of expectations, while infrastructure spending—which has soared in the race to build AI computing capacity—severely squeezed cash flow. Free cash flow came in at about negative $9.07 billion for the quarter, sending shares down nearly 10% after hours.
In a high-interest-rate environment, competition in AI is no longer just about technology and computing power. It is also a contest over capital efficiency and the ability to turn investment into commercial returns. For tech giants, if long-term Treasury yields remain elevated, the logic of supporting high valuations with distant future earnings will face much stricter scrutiny.
Gold and crypto assets: different assets, different rules
While Federal Reserve policy can affect risk appetite across markets, the factors that determine the prices of different assets vary widely.
The cost of holding gold is affected by fluctuations in real interest rates, but geopolitical hedging demand and central bank purchases also carry significant weight. It is too simplistic to assume that unchanged interest rates mean gold must rise or fall.
The short-term performance of crypto assets, by contrast, depends more on overall market liquidity, leverage-driven liquidations, and shifts in risk appetite. Macroeconomic decisions may trigger short-term volatility, but they do not necessarily determine the subsequent direction of prices.
When investing across markets, access to funding and transaction costs matter too
For investors following U.S. and Hong Kong stocks as well as digital assets, watching market prices alone is not enough. The ease of accessing trading venues and converting funds directly affects the investing experience. Currency conversions and transaction fees are real costs.
BiyaPay is an all-in-one asset allocation platform that uses USDT as its core funding gateway, connecting U.S. and Hong Kong stock trading with digital asset exchange services. Investors can convert USDT into U.S. dollars or Hong Kong dollars at any time to trade stocks, participate in digital asset trading, and manage fund transfers through cross-border remittances. For investors operating across multiple markets, this integrated service eliminates the hassle of constantly switching between tools and makes trading and fund management more efficient and seamless.
Three consecutive gains in U.S. stocks suggest the broader market has support near its bottom, but the divergence among tech giants sends a clear signal: markets will ultimately reward companies that deliver earnings.
The Federal Reserve holding rates steady cannot solve companies’ growth challenges for them. For investors, understanding the interplay between the cost of capital, corporate earnings, and valuations—and staying grounded in fundamentals while managing their funds carefully through market swings—is far more valuable than blindly chasing daily price moves.