Good morning! Today's a big Wednesday with both the Fed decision (2 p.m. ET) on deck and Microsoft and Meta opening their books after the bell. While unchanged rates seem likely, there's certainly some chatter about a potential hike.

Stocks were swirling around on Tuesday a bit in anticipation of all that news, but broke to the upside even as chip stocks sold off — again. 

The S&P 500 (^GSPC) gained 0.2%, and the Dow (^DJI) gained 1.0% as the Nasdaq (^IXIC) lost 0.2%.

What we're watching Wednesday: Did we say it's a big day? Besides Meta and Microsoft, Lam Research (LRCX), Procter & Gamble (PG), Arm Holdings (ARM), QUALCOMM (QCOM), Starbucks (SBUX), Robinhood Markets (HOOD), Boston Scientific Corporation (BSX), Carvana (CVNA), and Chipotle Mexican Grill (CMG) are all reporting quarterly results today, among others.

Yahoo Finance Morning Brief is written by Ethan Wolff-Mann.

See what else is trending on Yahoo Finance.

Meta CEO Mark Zuckerberg and Microsoft CEO Satya Nadella. (CHARLES PLATIAU/POOL/AFP via Getty Images)

It's time to hear from Microsoft and Meta.

For Meta, the big concern has been precisely what Google's problem was: spending too much money.

And like the rest of the hyperscalers, the twin-pronged question is: What is spending like, and is it actually converting into profits?

Both companies have had a rough past 12 months, and Meta's $145 billion investment this year is one of the reasons, with the sum stinging investors who want to see a payoff.

If Google is a prelude, that number may go up dramatically. But Meta investors now have their interest piqued after CEO Mark Zuckerberg announced that the company may be able to sell its compute — monetizing its surplus AI capabilities as a sort of AI commodity cloud provider, renting out data centers or even its undercutting model.

Meta's expensive long game may pay off, and we'll be listening to Zuck try to sell it. (Meta preview here.)

Meanwhile, the Microsoft story seems bleaker, despite its first-mover advantage. Microsoft has two diametrically opposed problems: not enough capacity to meet demand for its AI services and, like the others, concerns about how much it spends.

There is, however, chatter that Microsoft's capex may slow next year. (Microsoft preview here.)

New U.S. Federal Reserve Chairman Kevin Warsh holds a press conference following a two-day meeting of the Federal Open Market Committee (FOMC) at the U.S. Federal Reserve in Washington, D.C., U.S. June 17, 2026. REUTERS/Eric Lee

We are excited to hear what the Fed has in store for the market. 

The futures market suggests a 70% chance of a hold on rates, which is likely but certainly well within the intrigue window where anything could happen. (One prominent Wall Street firm sees a hike.)

Regardless of what the Fed — and Chairman Kevin Warsh — have in store, one thing is clear: Rates simply don't have the effect they used to.

On an individual level, they might. Our mortgages are painfully high in part thanks to high rates.

But as a tool to control the bond market (i.e., what sets consumer interest rates) or rein in a hot economy, they haven't done much lately.

As our Jared Blikre put it, "the bond market's danger zone is becoming the new normal," as a 4.6% yield used to mean something. (Namely, discomfort for stock investors.)

The fact that real rates (interest rate minus inflation rate) remain high suggests this isn't even about inflation but the simple fact that the economy seems almost, dare we say, recession-proof?

Famous last words, sure. 

But eventually, year after year of "resilience" to higher rates feels like a new normal. The economy has learned to thrive in a hostile rate environment.

And with that in mind, it's no wonder futures markets see Fed hikes looming.

The Google logo is seen on the Google house at CES 2024, an annual consumer electronics trade show, in Las Vegas, Nevada, U.S. January 10, 2024. REUTERS/Steve Marcus/File Photo

Alphabet's disappointing capex may have cast a shadow on the hyperscalers last week.

But the chip sell-off has caused something of a reappraisal as investors boomeranged back to Big Tech, giving Alphabet a Tuesday boost.

AI spending is directly benefiting the chip companies that are accepting these huge orders from Google, Microsoft, Meta, and others. But what it looks like if the spending is actually overspending isn't so clear.

Sometimes, it's been a negative for the companies doing the spending, but on Tuesday, Micron, AMD, SK Hynix, and others had a rough day in the market as investors considered whether they would be the real casualty if the industry is over its skis.

Our Brian Sozzi has some interesting data on AlphaSpace that shows why things seem bearish for chips.

But there's also a simpler way to look at the push-pull between the chipmakers and their hyperscaling clients: If an industry really is overextended, who might do better? It's a compelling thing to remember just how much Google and Meta were making pre-AI.

An aerial view of the Michigan Ford BlueOval Battery Park, under construction. (Jim West/UCG/Universal Images Group via Getty Images)

Until recently, you'd be forgiven if you thought Tesla was a car company. Or if you thought Microsoft made IT products or Amazon was a place you could buy stuff. Or Google and Instagram were places that let you see stuff in exchange for advertising.

The AI boom has completely transformed these companies, and though those businesses bring in billions, they're almost tantamount to side projects whose value is dwarfed by the AI bets and potential payouts.

That's old news, of course.

What isn't is that this effect is showing up in other parts of the market. Take Ford, which just reported results.

Truck maker, right? Sure, only the reason its stock soared 44% (not a typo) was that its battery business might be a massive asset in the AI data center-driven power crunch.

This is another level past the picks and shovels of data center build-outs that have benefited companies like Caterpillar.

The lens of utility in an AI world means that SpaceX is actually a data center company more than a payload-delivery service to low Earth orbit. Whether that's really true or not doesn't matter. Its valuation says that people think it's true.

For Ford, like Tesla, one wonders how far this conclusion might go. Will it ever consider abandoning being an automaker when you can get way better margins making batteries? That's hard to imagine.

But with big money on the table, we're probably going to see some pivots — full or otherwise.