Tech Earnings Whiplash as Fed Cools December Cut Hopes
Source: Connect Weekly | Week ending 25 October 2025
US stocks traded in record territory for most of the week before a late fade on Big Tech earnings and cautious Fed commentary. The S&P 500 and Nasdaq 100 touched new highs early on optimism over a US–China trade truce and blowout AI headlines, but profit-taking hit by Thursday as megacaps stumbled. The week closed mixed, with Amazon’s post-earnings surge cushioning broader weakness in tech.
What drove markets this week
Stocks started strong on Monday as officials from Washington and Beijing signaled progress toward a new trade agreement. The S&P 500 jumped 1.2% and the Nasdaq 100 gained 1.8%, both closing at record highs. Semiconductor and AI-linked names led, boosted by optimism that the tariff détente would unlock chip demand. Qualcomm spiked after announcing Saudi Arabia’s HUMAIN as the first buyer of its new AI data center chips, while Palantir rose on news of a fresh European defense deal.
Momentum carried into Tuesday as tech stocks powered another round of records ahead of the Fed’s policy meeting. Nvidia stole the show after CEO Jensen Huang revealed $500 billion in orders for the company’s new Blackwell and Rubin chips through 2026, alongside new partnerships with Palantir, CrowdStrike, and Lucid. But smaller caps lagged, with the Russell 2000 down 0.6%.
Fed cuts rates, but signals patience
On Wednesday, the Fed cut rates by 25 basis points to a range of 3.75%–4%, matching expectations and ending quantitative tightening as of December 1. Stocks were little changed after the announcement, but dipped mid-press conference when Chair Jerome Powell said another cut in December was “far from” guaranteed. Tech once again provided support, pushing the Nasdaq 100 to another record. Nvidia became the first $5 trillion company, while Caterpillar and Seagate jumped on strong earnings.
Earnings jolt megacaps
Thursday saw the tide turn. Big Tech earnings drove a broad selloff as Meta plunged on a tax-related miss and cautious guidance, and Microsoft slid after reversing its prior capex stance. Chipotle, eBay, and Carvana also sank after weaker forecasts, while Boeing fell after Trump’s meeting with Xi produced no new deals. Alphabet bucked the trend with strong cloud results, and ServiceNow spiked on a stock split announcement.
Friday: Amazon steadies the ship
Markets stabilized Friday after Amazon’s blowout earnings sent the stock up more than 10%, helping the S&P 500 and Nasdaq 100 recoup part of the week’s losses. Apple opened flat after steady results, while smaller caps lagged again. Consumer-facing names regained some footing, though momentum remains fragile after the week’s volatility in tech.
Looking ahead
With earnings season in full swing and rate-cut expectations fading, investors now face a more nuanced backdrop. The Fed’s signal of caution leaves markets trading on data — not promises. Next week brings US GDP and PCE inflation updates, both potential catalysts for recalibrating the timing of the next move. After a week defined by megacap whiplash, the path of least resistance still runs through tech, but confidence is no longer unanimous.
.svg)
