Stock futures moved lower on Wednesday night as investors digested a batch of Big Tech earnings and the Federal Reserve’s interest rate decision.
Futures tied to the Dow Jones Industrial Average slipped 95 points, or 0.2%. S&P futures fell 0.2%, while Nasdaq 100 futures was down 0.3%.
Megacap tech giants Alphabet, Meta and Microsoft each reported quarterly results after market close Wednesday, which market participants have been keenly awaiting for further clues on the health of artificial intelligence trade. Investors are trying to gauge the pace of spending on AI and the returns companies are getting for this investment. While Google parent Alphabet shares popped about 6% on the back of strong results, shares of Meta and Microsoft tumbled about 8% and 4%, respectively. Reactions to the results weighed on the broader market in after-hours trading.
Meta recorded its highest revenue growth since the first quarter of 2024, but the social media company said that President Donald Trump’s One Big Beautiful Bill Act led it to incur a one-time charge of $15.93 billion. Meta expects the law will weigh on U.S. federal cash tax payments for the rest of this year and future years. Microsoft shares moved lower after the company said its investment in OpenAI reduced its earnings by $3.1 billion in the quarter. That revelation sparked worries about ongoing AI spending.
In the previous session, the Dow Jones Industrial Average rolled over — ending the day down about 0.2%, or about 74 points — after it briefly touched a record high earlier. The S&P 500 ended the day flat, while the Nasdaq closed up nearly 0.6%.
The 30-stock Dow had notably declined after Federal Reserve Chair Jerome Powell suggested the central bank may not cut interest rates again at its December meeting, which investors had been betting on. “A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it,” he said. The Fed on Wednesday lowered its benchmark overnight borrowing rate by a quarter percentage point to end its two-day policy meeting, putting it in a range of between 3.75% to 4%.
“The interest rate cut was the easy part as markets were giving the Fed breathing room,” said Chris Maxey, chief market strategist at Wealthspire Advisors. “For now, there is appropriate balance between monetary policy and the labor/inflation picture. Powell spooked markets with comments on the lack of conviction on a December rate cut and that’s where we may start to see the slow to respond narrative begin.”
CFRA chief investment strategist Sam Stovall said that the Fed “might be forced to cut more than they indicated wanting to” if tech earnings prove that AI-related productivity is ramping up at a faster pace than anticipated. October has historically been the most volatile month of the year, he noted, adding that any upcoming price uncertainty could ultimately provide traders with an attractive buying opportunity.
Investors are awaiting a high-stakes meeting between Trump and Chinese President Xi Jinping set to begin late Wednesday, as discussions could provide more clarity on the state U.S.-China relations amid ongoing trade disputes.
Chipotle shares plunge 15% in after-hours trading as younger consumers pull back spending
Chipotle shares plunged about 15% in extended trading Wednesday. The burrito chain reported quarterly revenue that fell short of expectations and cut its same-store sales forecast for the third straight quarter.
Chipotle is expecting its full-year same-store sales to shrink by a low single-digit percentage in fiscal 2025 — a big change from February, when the burrito chain was projecting same-store sales would grow by a low to mid single-digit percentage.
CEO Scott Boatwright said the company is seeing “consistent macroeconomic pressures.” Traffic fell by 0.8%, the third straight quarter of declines.
Chipotle, which typically serves higher income customers, is seeing consumers across all income cohorts visit less frequently, particularly individuals between the ages of 25 and 35 years old.
— Amelia Lucas, Pia Singh
Alphabet, Meta, Chipotle among several stocks moving Wednesday evening
Check out the companies making headlines in after-hours trading.
- Alphabet — Shares of the Google parent jumped nearly 5% on the back of strong results, which included better-than-expected Google Cloud revenue and YouTube advertising revenue. Alphabet earned $3.10 per share, on an adusted basis, topping the $2.33 per share estimate from LSEG. The search giant’s revenue for the period came out at $102.35 billion, while analysts expected $99.89 billion in revenue.
- MGM Resorts — The casino hotel operator tumbled 6% postmarket Wednesday after third-quarter earnings fell short of estimates, hurt by declining visits to Las Vegas. It earned 24 cents per share after adjustments on revenue of $4.25 billion. Analysts expected MGM to earn 40 cents per share on $4.23 billion of revenue.
- Meta — Shares of Facebook parent Meta dropped nearly 9% after market close, despite having posted a beat on top and bottom lines. Meta reported adjusted earnings of $7.25 per share on revenue of $51.24 billion for the third quarter, while analysts polled by LSEG expected $6.69 per share on $49.41 billion in revenue. The company said it took a nearly $16 billion one-time charge during the period tied to U.S. President Donald Trump’s Big Beautiful Bill and said it expects its capital expenditures to be higher in 2026 compared to this year.
- Chipotle — Shares of the Mexican food chain fell more than 13% after it cut its same-store sales forecast for the third-straight quarter. Chipotle said it has been seeing a decline in visitors to its restaurants. The company now expects fiscal 2025 same-store sales to be down by a low-single digit percentage rate.
For the full list, read here.
— Pia Singh
