The Megacaps Did Not Outrun the Fed

October 29, after the close. A hold with two votes for a hike, Alphabet down 12.6%, Amazon and Intel lower after hours, and Treasuries rallying on an AI selloff day, as our October 25 review laid out.

By Djellal Djouad. October 29, 2026, after the US close.

Educational content, not investment advice. Options and futures carry a high risk of loss.

Source: Bloomberg Djellal Djouad. Bloomberg Today, Thursday October 29, 2026.

On Sunday, the last section of our weekly review came down to one question: can the megacaps outrun the Fed? Four sessions later, the answer is no.

What we wrote on October 25

• On the Fed: "Either way, the Fed is not the catalyst that rescues equities next week."

• On stocks: "Only the megacaps can rescue the market." The risk we named: "A repeat from Microsoft or Alphabet would remove the last support of the cap-weighted index."

• On rates: "A Fed hold is the trigger for the next leg of the Treasury squeeze."

The Fed held, and it did not help

On Wednesday the Fed kept its target range at 3.75% to 4% by 10 votes to 2. The two dissenters wanted a 25 bp hike.

Thursday's inflation data kept the pressure on. The PCE price index rose 0.5% in September and 3.6% over a year, up from 3.4% in August. Core PCE stands at 3.1%.

At Thursday's close, fed funds futures still priced a 74.6% chance of a hike on December 9, against 75% when we wrote. The path further out has come down a little: the implied rate now peaks at 4.46% in September 2027, against 4.56% in October 2027 on October 23.

Source: Bloomberg Djellal Djouad. World Interest Rate Probability, United States, fed funds futures, October 29, 2026: 74.6% probability of a hike on December 9, implied rate peaking at 4.46% in September 2027.

The megacaps did not carry the index

Alphabet repeated the template Meta set on October 22: a miss in search advertising, about $9 billion of negative free cash flow and a "significant" increase in investment planned for 2027. The stock opened with a gap and closed down 12.64% at $283.82.

Source: Bloomberg Djellal Djouad. Alphabet over three sessions, regular hours, October 27 to 29, 2026: the gap after the October 28 results. The chart change is measured from the October 26 close.

Microsoft reported Azure growth of 48% with spending below expectations. The shares rose after hours on Wednesday, then closed flat on Thursday, down 0.12%.

Amazon closed down 4.25% at $243.79 before its results. After the release it fell to $214.01 at 4:02 pm New York, then traded at $226.73 at 4:56 pm, 7.0% below its close.

Source: Bloomberg Djellal Djouad. Amazon on October 29, 2026, pre market, regular session and post market: close $243.79, low $214.01 at 4:02 pm New York after the results.

Intel closed at $92.07, fell to $71.20 at 4:05 pm after its results and traded at $77.27 at 4:56 pm, 16.1% lower.

Source: Bloomberg Djellal Djouad. Intel on October 29, 2026, pre market, regular session and post market: close $92.07, low $71.20 at 4:05 pm New York after the results.

During the session, the damage stayed inside AI tech. The Nasdaq 100 lost 1.38% and the S&P 500 only 0.30%, while the Russell 2000 ETF gained 0.97%, Apple 1.48% and Meta 1.98%. Europe closed higher, with the DAX up 1.31% and the CAC 40 up 1.05%. Investors moved out of AI tech, not out of stocks. The VIX closed at 17.20.

Source: Bloomberg Djellal Djouad. World equity indices at the US close, October 29, 2026: S&P 500 down 0.30%, Nasdaq Composite down 1.38%, Europe higher.

After Amazon and Intel, equity futures took the next leg down. Nasdaq 100 futures settled at 29,562 at 4 pm, down 1.39%, then fell to 29,111 at 4:06 pm and stood at 29,218 when trading paused at 5 pm, 2.54% below Wednesday's settlement. S&P 500 futures went from a 7,754.25 settlement to about 7,710, 0.94% below Wednesday.

Source: Bloomberg Djellal Djouad. Nasdaq 100 futures (NQ1), October 29, 2026, from the 6 pm open on October 28 to the 5 pm pause: low of 29,111 at 4:06 pm New York after the Amazon and Intel results, 2.54% below the October 28 settlement.

The Treasury leg is running

On October 18 we wrote that "AI specific sessions behave differently: on those days, yields fall with stocks." Thursday was one of those days. The 10-year Treasury yield fell 8.1 bp on the day to 4.94%, after a session high of 5.04%. Treasury bond futures gained about 0.9%.

Source: Bloomberg Djellal Djouad. US 10-year Treasury yield, intraday October 29, 2026: 4.937% at 4:59 pm New York, down 8.1 bp, after a high of 5.038%.

The squeeze is starting where we expected it. On our trend-following model, the short-term signal has flipped to long on the whole US curve, from the 2-year to the 30-year, and on SOFR futures. The medium and long-term signals are still short, so trend followers remain net short for now. If the medium-term signals flip next, the buying becomes mechanical.

What comes next

• Positioning. On our October 25 numbers, hedge funds held a record 22% of their exposure in the Magnificent 7. After Alphabet and Amazon, de-grossing can resume.

• Apple reports on Monday, November 2, after the close. It is the next megacap test.

• The Bank of Japan decides on Friday. A December hike signal would lift the yen and pressure carry trades.

So far the market has rotated rather than broken: on the session, the S&P 500 lost 0.3% and the Nasdaq 100 1.4%. The question for Friday is whether the cap-weighted index can hold now that its last support is giving way.

Educational content, not investment advice. Options and futures carry a high risk of loss.