A Day of High Drama Awaits as Fed and ‘Mag 7’ Earnings Take Center Stage

• Investors are gearing up for what is expected to be one of the busiest days of the year.
• The Federal Reserve will announce its January rate decision, followed by Jerome Powell’s post-meeting press conference.
• Besides the Fed, earnings from Meta Platforms, Microsoft, and Tesla are on the agenda.
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Wednesday is shaping up to be one of the most pivotal days for financial markets in 2025, with the Federal Reserve’s latest policy and major earnings reports from three of the ‘Magnificent Seven’ tech giants on the agenda.

The Fed’s stance on interest rates will shape the macroeconomic outlook, while quarterly updates from Meta Platforms (NASDAQ:), Microsoft (NASDAQ:), and Tesla (NASDAQ:) —collectively worth over $5 trillion— will provide insights into the health of the tech sector, a critical driver of recent market performance.

Buckle up, because this combination of economic and corporate updates is likely to set the tone for weeks to come. Here’s what’s at stake:

• Fed FOMC Meeting: 2:00 PM ET

The Federal Reserve’s January policy decision, due at 2:00PM ET, is expected to be a snooze-fest on the surface.

funds futures signal a 98% chance that interest rates will remain parked at the current 4.25%–4.50% range, per Investing.com’s Fed Monitor Tool.

Source: Investing.com

However, the real fireworks could come at 2:30 PM ET when Fed Chair Jerome Powell holds his post-meeting . Powell is expected to face questions about the Fed’s independence following public comments by President Donald Trump, who recently urged the central bank to “drop interest rates immediately.”

Markets now see June as the most likely timing for the first cut, with the May meeting a coin flip. Investors will dissect every word from Powell for clues about the path ahead, especially as inflation starts to show signs of picking up again.

Any changes in the Fed’s tone or policy outlook could have significant implications for the stock market. If the Fed signals a continuation of its supportive monetary policy stance, it could buoy risk assets, but a more hawkish tone might trigger some investor caution.

• Tech Earnings Extravaganza: Meta, Microsoft, and Tesla

As if the Fed drama wasn’t enough, three ‘Magnificent Seven’ tech giants—Meta Platforms, Microsoft, and Tesla—will dominate the after-hours spotlight with earnings reports that could make or break the market’s 2025 momentum.

Here’s a preview of what to watch for from each company:

Meta Platforms – Reports at 4:05 PM ET

Meta is expected to deliver another strong quarter as the tech behemoth continues to benefit from its AI-powered advertising tools and expanding revenue streams across Instagram, WhatsApp, and its growing metaverse initiatives.

Analysts forecast Q4 revenue to rise 17% year-over-year to $47 billion, with adjusted earnings per share (EPS) expected at $6.74, a 27% jump from last year.

Source: InvestingPro

Investors will also look for guidance on 2025 capital expenditures, which CEO Mark Zuckerberg recently said could reach up to $65 billion as Meta accelerates its AI infrastructure buildout.

Any updates on the impact of AI-driven advertising, the metaverse’s monetization, or a potential TikTok ban will also be closely scrutinized, as will any commentary regarding China’s DeepSeek AI model.

Microsoft – Reports at 4:05 PM ET

Microsoft has been riding high on the strength of its Azure cloud business and its burgeoning AI initiatives, including its popular Copilot feature integrated into Office and other applications.

Analysts expect Q2 FY2025 revenue of $68.8 billion, up 10.9% year-over-year, with EPS projected at $3.12, marking a 6.6% increase.

Source: InvestingPro

Investors will be eager for updates on how Copilot adoption is translating into revenue growth, the performance of the gaming division following the Activision acquisition, and the profitability trajectory of its AI-driven services amid its partnership with OpenAI.

Microsoft’s cloud dominance will also be a key area of focus as enterprises continue their digital transformations.

Tesla – Reports at 4:30 PM ET

The EV leader caps the day with its Q4 FY2024 earnings report, and expectations are mixed.

Analysts project Tesla’s revenue to climb 8% on an annual basis to $27.1 billion, while EPS is forecast to increase 8.4% to $0.77 as the company navigates margin pressures amid price cuts and intensifying competition.

Source: InvestingPro

Key areas to watch include updates on Cybertruck production ramp-ups, delivery numbers, and Tesla’s Full Self-Driving (FSD) progress.

Investors are also likely to focus on Tesla’s guidance for 2025, especially regarding its pricing strategy and efforts to maintain profitability in a competitive EV market.

Markets Brace for Volatility

With the Fed’s policy announcement, Powell’s remarks, and earnings from three of the biggest companies in the world, today is likely to be a whirlwind for investors.

Fasten your seatbelts—it’s going to be a wild ride.

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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF (SPY), and the Invesco QQQ Trust ETF (QQQ). I am also long on the Invesco Top QQQ ETF (QBIG), Invesco S&P 500 Equal Weight ETF (RSP), and VanEck Vectors Semiconductor ETF (SMH).

I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies’ financials.

The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.

Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.