Finance

The Federal Reserve kept interest rates unchanged in the 3.5% to 3.75% range for the third consecutive meeting. Policymakers noted that while the economy expanded at a 2% rate, soaring energy prices and a tight labor market have kept inflation above target. Current projections suggest the central bank may only implement a single rate cut throughout the remainder of 2026.

Energy stocks have emerged as a dominant force in 2026, with the S&P Energy Select Sector index rising nearly 25% year-to-date. This outperformance is driven by supply disruptions and high demand related to global geopolitical conflicts and the infrastructure needs of the AI industry. Materials and industrial sectors also saw gains, benefiting from a rebound in commodity prices and strong domestic growth projections.

Recent earnings reports from Alphabet, Meta, and Microsoft revealed a significant increase in capital spending dedicated to artificial intelligence infrastructure. While Alphabet saw record net income, Meta and Microsoft shares faced pressure as investors weighed the long-term profitability of these massive investments against current rising costs. Microsoft alone projected its 2026 capital spending could reach $190 billion to support soaring memory and power requirements.