Finance

The Federal Open Market Committee voted to keep interest rates in the 3.5% to 3.75% target range during its late April meeting. Chair Jerome Powell confirmed he will remain on the Board of Governors after his term as chair expires on May 15, when Kevin Warsh is expected to take the helm. The central bank cited elevated inflation, driven by recent spikes in global energy prices, as a primary reason for the pause in rate cuts.

The U.S. economy expanded at an annualized rate of 2% in the first quarter of 2026, a significant increase from the 0.5% growth seen in the final quarter of 2025. While business investment in software and equipment—largely driven by the AI sector—powered the gains, inflation also rose sharply. The PCE price index jumped to 4.5%, reflecting the impact of higher fuel costs linked to international conflict.

Alphabet shares surged 10% following a quarterly profit report that exceeded analyst expectations, while Meta and Microsoft saw declines of 8.7% and 3.9% respectively. The market reaction highlighted growing investor scrutiny over high capital expenditures dedicated to artificial intelligence. In other sectors, Caterpillar shares jumped nearly 10% after the company raised its annual revenue outlook and reported strong quarterly profits.