Finance

The US economy expanded at a solid 2% annual rate in the first quarter of 2026, defying some fears of a sharper slowdown during the early weeks of conflict in the Middle East. However, the Commerce Department also reported that the PCE price index accelerated to 3.5%, marking its largest increase in nearly three years. This combination of steady private investment and rising price pressures suggests a complex outlook for consumer spending and future monetary policy.

Investor reactions to recent 'Magnificent Seven' earnings reports have been sharply divided. Alphabet and Amazon shares climbed following strong cloud revenue growth and hiked capital expenditure forecasts for 2026. In contrast, Meta Platforms faced a 9% pre-market decline due to substantial quarterly losses in its Reality Labs unit and disruptions in its Iranian operations, while Microsoft saw its shares dip after issuing revenue guidance that fell short of expectations.

The Federal Reserve voted unanimously to keep interest rates steady at 3.65 percent effective April 30, 2026. Fed Chair Jerome Powell signaled that ongoing conflict in the Middle East is creating significant economic uncertainty, leading money markets to scale back expectations for rate cuts this year. While the 10-year Treasury yield moderated slightly to 4.40% after the announcement, volatility remains elevated as traders weigh military developments against domestic inflation data.