Market Close: Stocks Higher, Fed Holds Rates Steady, Alphabet Results Disappoint • 10/28/26

0:01CNBC Business News Update. Market close. I'm Jessica Ettinger. Wall Street opens Thursday morning after the Fed held interest rates steady and said the economy was good. Inflation's too high, though. And a rate increase in December is on the table. Markets with modest gains on Wednesday. The Dow up 97 points. The S &P 500 index adding 21. The NASDAQ was up 72 points. The Fed held interest rates steady even with concerns about inflation. A take from J.P. Morgan's David Kelly on CNBC. Inflation will probably ease next year anyway. Why? Well, because you can have a short, sharp attack in Iran, but we know how this is going to end.

0:43However long that lasts, eventually all the oil is going to flow out from both Iran and everybody else in the Gulf states. Also, tariff rates are going to be going down. That helps. We don't have any wage growth. We've got strong productivity growth. And also the housing issue. Pousing is a big driver. The rental vacancy rate today hit its highest level since 2014. That's going to put down pressure on rents. That's a big, it's a third of CPI is going to get squished by that. And so all these things say, look, inflation's going to moderate anyway. The Fed doesn't need to be in a panic here. And with the election six days away, just this is the right thing to do.

1:17Microsoft out with better than expected quarterly results. Shares higher on initial reaction. And after hours trading on Wednesday, cloud growth came in higher than expected. But Google and YouTube parent Alphabet disappointed with its results after the bell. Shares tanked 8 % on first reaction in after hours trading on Wednesday. DA Davidson's Gil Luria says both names are solid stocks. These companies are now trading between 21 and 23 times next year's earnings, which are probably numbers that are going up. So they're very attractively valued on accelerating revenue with stable to improving margins, which is to say good returns on their investments in AI.

2:00Microsoft and Alphabet, those are magnificent seven tech names investing in AI, while many investors are plowing money right into the AI companies. But a big picture view of the AI trade now. From Dynamics, Noah Blackstein on CNBC. The trend of AI is probably one of the most impactful and consequential tech trends of my career. You know, nothing is ever up and to the right and straight. So, you know, the leaders today aren't necessarily the leaders tomorrow. Think back to the days talking about names like Nokia or Lucent or Sun Microsystems that we don't talk about anymore. So I still don't think the winners have necessarily been decided.

2:35Investors are keeping tabs on early voting ahead of Tuesday's midterm elections. Deutsche Bank's Bankim Chata tells CNBC stocks could go higher after the election. Midterm election Q4s have been generally very positive. 21 out of the last 23 saw, you know, the market rally. Average rally is 7 percent. Oil spiked Wednesday. New Houthi attacks on a Saudi Arabian refinery sending prices higher. Here's CNBC's Pippa Stevens. Aramco's Rastanera refinery, that's the largest in the country, hit by a ballistic missile, with the U.S. reportedly warning Persian Gulf countries to be prepared for a short, intense military campaign after the midterms.

3:16That's according to The Wall Street Journal. Now, Iran is clearly feeling the pressure from depleted oil revenue. Eurasia Group saying Iran will resist U.S. pressure and mount an aggressive retaliation. U.S. crude topping$103 a barrel Wednesday. AAA said the national average for a gallon of regular gas,$4.24. The same day one year ago, gas was about$3 a gallon. On Thursday's watch list, earnings are coming from Amazon, Caterpillar, Eli Lilly, and Merck, to name a few. We find out how many people applied for unemployment benefits last week. We also get the latest on U.S. economic growth with GDP numbers, gross domestic product.

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