5 Things to Know Before the Stock Market Opens Thursday

Here are five key things investors need to know to start the trading day:

The so-called “Magnificent Seven” tech stocks continue to dominate market narratives, but their individual performances following earnings releases paint a complex picture. Alphabet, Microsoft, and Meta Platforms all reported earnings yesterday, triggering sharply divergent reactions from investors despite exceeding consensus estimates for EPS and revenue.

Key takeaways:

• Alphabet (GOOGL) saw its shares jump over 7% after the Google parent demonstrated strong growth in its Google Cloud and YouTube businesses, exceeding analysts’ revenue forecasts. The company’s forward guidance emphasized a significant increase in capital expenditure in 2026, driven by the need to build out infrastructure to support the escalating demands of AI-driven applications. This aggressive investment strategy signals Alphabet’s commitment to maintaining its competitive edge in the rapidly evolving AI landscape. Investors are betting that Alphabet’s established market share and robust cloud infrastructure will allow it to effectively monetize its AI investments.
• Microsoft (MSFT), on the other hand, experienced a share price decline of over 2%, despite reporting solid earnings. The market’s apprehension stemmed from the company’s projection of increased spending growth and the revelation of a $3.1 billion negative impact related to its investment in OpenAI. The timing was inopportune, given a recent outage affecting its Azure and 365 services, raising concerns about the reliability and scalability of its cloud infrastructure. Analysts are questioning whether Microsoft’s heavy reliance on OpenAI for AI innovation is sustainable and whether the benefits outweigh the financial and operational risks.
• Meta Platforms (META) shares plunged 9% as investors reacted negatively to a one-time tax charge and a substantial $4.4 billion loss within its Reality Labs division. While CEO Mark Zuckerberg defended the company’s significant AI investments, arguing that the company is “seeing the returns,” the persistent losses in its metaverse-focused Reality Labs are fueling concerns about the long-term viability of its strategic pivot. The market appears to be favoring companies demonstrating more immediate and tangible returns from their AI investments. The lack of profitability of the Reality Labs division could continue to weigh on Meta’s stock price until Meta can demonstrate either tangible benefits of the project or scale back operations.
• All eyes are now on Apple (AAPL) and Amazon (AMZN) as the remaining Magnificent Seven members prepare to report after the bell. Their results and guidance will provide further insights into the overall health of the tech sector and the sustainability of the AI-driven market rally.
• The divergent reactions to the earnings reports of Alphabet, Microsoft, and Meta are impacting stock futures this morning.

The Federal Reserve delivered a widely anticipated 25-basis-point interest rate cut yesterday, but Chairman Jerome Powell tempered market enthusiasm with a cautionary statement. While the rate cut itself was welcomed, Powell’s remark that another rate cut at the December meeting “is not a foregone conclusion” sent a chill through the market.

The Dow Jones Industrial Average, which had earlier reached an all-time high, retreated into negative territory following Powell’s comments, underscoring the market’s sensitivity to the Fed’s forward guidance. The Fed’s commitment to data dependency suggests a cautious approach to future monetary policy adjustments, with a close watch on inflation and employment data.

Interestingly, Powell also drew a distinction between the current AI investment boom and the dot-com bubble of the late 1990s, emphasizing that companies fueling the AI surge “actually have earnings”. This suggests the Fed views the AI sector as being underpinned by more solid fundamentals than the speculative investments that characterized the dot-com era.

Here are the biggest takeaways from the Fed meeting.

In a potentially significant development for global trade relations, President Trump announced a trade agreement with Chinese President Xi Jinping following their meeting in South Korea. The deal addresses key areas of concern, including tariffs, fentanyl, and rare earth minerals.

Trump stated that he would immediately reduce fentanyl-related tariffs on China from 20% to 10%, lowering the overall tariff rate on Chinese goods from 57% to 47%. In exchange, Beijing has agreed to resume soybean purchases and intensify efforts to curtail the flow of fentanyl into the U.S. The move is primarily political; the fentanyl crisis continues to plague the US, and has been a repeated criticism of the Trump administration.

Furthermore, China will postpone its planned export controls on rare earth materials for one year. This decision is particularly noteworthy given the strategic importance of rare earths in numerous high-tech industries, including electric vehicles and renewable energy. The delay mitigates concerns about potential supply chain disruptions and provides companies with more time to diversify their sourcing.

Beyond the tech sector, the restaurant industry is also experiencing significant volatility, driven by shifting consumer preferences and economic headwinds. Chipotle’s (CMG) shares are down in after-hours trading after they missed expectations and reduced long-term revenue forecasts.

Chipotle (CMG) shares experienced a sharp decline of over 18% after the fast casual chain reported lower-than-expected third-quarter revenue and lowered its sales outlook, citing challenges in attracting younger consumers. The company cited economic stagnation as the primary reason for lower sales.

Starbucks (SBUX), meanwhile, saw its shares decline by approximately 3% after the coffee chain reported lower-than-anticipated earnings, despite recording same-store sales growth for the first time in nearly two years and exceeding $1 billion in sales through its coffee delivery business. While some analysts believe Starbucks’ initiatives to enhance its digital presence and delivery services are yielding positive results, others remain concerned about the long-term impact of inflationary pressures and increased competition on its profitability.

Restaurant Brands International (QSR) stood out as a bright spot, exceeding Wall Street forecasts for both earnings and revenue in the third quarter, fueled by strong performance in its Tim Hortons brand and international operations. Shares rose 3% in premarket trading, reflecting investor confidence in the company’s diversified portfolio and global growth strategy.

Comcast (CMCSA) reported third-quarter earnings that exceeded analysts’ expectations, despite experiencing a fourth consecutive quarter of declining broadband subscriber growth. Attention will likely be on the comments by company executives during this morning’s call. The question is, could the company acquire any assets from former competitors? Analysts will be monitoring any discussion of a possible takeover bid for Warner Bros. Discovery (WBD) or some of its assets.

While concerns exist regarding potential regulatory hurdles, particularly given President Trump’s stance on media consolidation, some Comcast executives believe these concerns are exaggerated or premature. A potential merger between Comcast and WBD would create a media powerhouse with substantial scale and a diversified content portfolio, but it would also face intense scrutiny from antitrust regulators. A spokesperson for Comcast declined to comment.

— *CNBC’s Ashley Capoot, Ari Levy, Jonathan Vanian, Jennifer Elias, Pia Singh, Jeff Cox, Sarah Min, Sean Conlon, Sam Meredith, Anniek Bao, Evelyn Cheng, Amelia Lucas, Lillian Rizzo and Laya Neelakandan contributed to this report. Josephine Rozzelle edited this edition.*