The Federal Reserve has paused interest rate adjustments, and U.S. stocks have risen for the third consecutive trading day. However, tech giants moved in different directions after their earnings reports: Microsoft rose after hours, while Google’s parent company Alphabet fell sharply. Market focus is shifting away from the interest rate decision itself towards corporate earnings, returns on AI investments, and cash flow performance.

On October 28, Eastern Time, the Federal Reserve voted 10 to 2 to maintain the target range for the federal funds rate at 3.75% to 4.00%. Two dissenters advocated for a 25 basis point rate hike. The Fed also raised its assessment of economic activity and pointed out that inflation remains at a relatively high level.

According to market data observed by BiyaPay, on that day, the U.S. stock market closed with the S&P 500 index up 0.28% at 7743.98 points; the Dow Jones Industrial Average rose 0.19% to 52475.10 points; and the Nasdaq composite index increased approximately 0.27% to 26549.85 points. The three major indices have closed higher for the third consecutive trading day, but the gains are relatively modest.

An increase in the indices does not mean that all tech stocks will rise together. The market is assessing the impact of interest rates on valuations while re-evaluating corporate earnings, capital spending on AI, and cash flow performance. For investors focusing on U.S. stocks, Hong Kong stocks, and digital assets, it is essential not only to analyze market trends but also to consider trading channels, currency conversion, and capital inflow and outflow arrangements. Especially when switching between different markets, how funds are converted and how trading costs are calculated will also affect the actual investment experience.

BiyaPay, as a global one-stop asset allocation platform, uses USDT as the core funding entry point, connecting services for U.S. stock trading, Hong Kong stock trading, and digital asset exchange. Users can convert USDT into U.S. dollars or Hong Kong dollars based on their needs for relevant stock trading; they can also participate in digital asset trading supported by the platform and arrange for capital flow in conjunction with services like cross-border remittances. For users who focus on multiple markets, this integrated service helps reduce switching between different tools, making transactions, exchanges, and cross-border funding arrangements more coherent.

Maintaining interest rates does not mean that the easing cycle has arrived

Keeping interest rates unchanged does not equate to a decline in funding costs. Corporate financing, household credit, and stock valuations still remain affected by current interest rates.

If the market had previously expected the Federal Reserve to maintain interest rates, the direct impact of the announcement may be limited. What’s more concerning is whether subsequent data on inflation, employment, and economic growth will change policy expectations.

This meeting saw two dissenting votes supporting a rate hike, reflecting differing judgements within the decision-making body regarding inflation risks. However, this does not mean the Fed has decided to raise rates in December; subsequent actions will still depend on economic data and policy evaluations.

Interest rate futures reflect market expectations at specific points in time, not the Fed's commitments to future policy. Investors need to assess the interest rate path based on the meeting statements, economic data, and subsequent policy statements rather than infer market trends solely from a single interest rate decision.

Why are Microsoft and Google diverging? The market is starting to compare cash flow

The reactions to Microsoft and Alphabet's earnings reports reflect a change in the current investment logic in tech stocks: the market is not only concerned about how fast AI business growth is but also scrutinizes how much capital companies need to invest and whether these investments can yield sustainable returns.

In the fiscal quarter ending in September, Microsoft's Azure cloud business revenue grew by 48% year-over-year, with free cash flow reaching approximately $18.6 billion, significantly exceeding analyst expectations. The strong growth in cloud business and cash generation capacity provided the market with relatively clear performance support. After the earnings report was released, Microsoft’s stock rose by over 3% in after-hours trading.

In contrast, Alphabet faced different challenges. The company’s core search advertising business growth fell short of market expectations, although Google Cloud performed strongly, the increased investment in AI infrastructure put pressure on cash flow. The company’s free cash flow for the quarter was approximately negative $9.07 billion, leading to a nearly 10% drop in stock price after hours.

This does not mean that companies with positive free cash flow are necessarily buy-worthy, nor that companies with negative cash flow must lack investment value. The key is whether companies can justify current investments through future income, profit, and cash recovery.

Especially in an environment where interest rates remain relatively high, companies that rely on future earnings to support valuations must face stricter return validations. The competition in the AI industry is not just about technology and computing power; it is gradually becoming a contest of capital efficiency and commercialization capability.

U.S. Treasury yields and valuations remain significant variables for tech stocks

The Federal Reserve’s decision to maintain interest rates does not mean that yields on Treasury bonds across different maturities will decline synchronously. Short-term yields are more susceptible to expectations of future policy meetings; long-term yields are also influenced by factors such as inflation, economic growth, and term premiums.

For tech companies, long-term funding costs are especially important. Some AI projects require years of investment before they can generate scaled returns. If long-term yields remain high, investors may be more cautious in assessing the present value of these future earnings.

However, a decline in yields does not necessarily equate to a positive outcome. If declines stem from easing inflation, stock valuations may receive support; if it reflects a significant economic downturn, corporate earnings expectations could also be lowered.

Therefore, observing tech stocks should not only focus on whether the Fed adjusts interest rates but also pay attention to bond market reactions and whether corporate earnings can support current valuations.

Gold and Bitcoin should not apply the same logic

The Federal Reserve's policy will influence the dollar, bond yields, and market risk appetite, but gold and Bitcoin have different pricing mechanisms.

Gold does not generate interest, and changes in real interest rates will affect its opportunity cost, but safe-haven demand, central bank purchases, and physical demand are equally important. Therefore, it cannot be simply assumed that if interest rates remain unchanged, gold will inevitably rise or fall.

Bitcoin's short-term performance may be influenced by market liquidity, capital flows, leverage positions, and risk appetite. Fed meetings may trigger short-term volatility but do not necessarily determine subsequent trends.

For investors who focus on stocks, gold, and digital assets, it is more valuable to analyze performance and the driving factors behind various asset types, rather than inferring where funds are flowing based solely on the rise or fall of a single asset.

After the index rise, the market places greater importance on profit realization

The three consecutive rises in U.S. stocks indicate that the market still has some support; the post-market divergence between Microsoft and Alphabet shows that investors are examining the quality of corporate earnings, cash flow, and returns on AI capital spending more seriously.

By keeping interest rates unchanged, the Federal Reserve reduced one source of uncertainty for the night, but it did not resolve future profit issues for companies. Moving forward, inflation and economic data will continue to influence interest rate expectations, and whether companies can translate technology investments into sustained income and cash flow will also affect performance differences among tech stocks.

For investors, understanding the relationship between funding costs, corporate earnings, and valuations is more important than merely guessing the next interest rate decision. Maintaining focus on fundamentals and capital arrangements amid market fluctuations is more meaningful than chasing single-day gains or losses.

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