The Federal Open Market Committee concludes its two-day meeting Wednesday and will announce its policy decision at 2 p.m. ET, followed by a press conference at 2:30 p.m. ET led by Chair Kevin Warsh. The federal funds rate has sat at 3.50%-3.75% since December 2025, unchanged across five consecutive meetings as the Fed has tried to balance above-target inflation against the risk of a more serious economic slowdown. Economists polled ahead of today's meeting broadly expect another hold, but traders in the fed funds futures market are assigning roughly a 30% probability of a quarter-point hike -- an unusually wide band of uncertainty for a meeting day.
That uncertainty is being fed by fresh geopolitical fuel: Iran launched surprise attacks on U.S. forces overnight, sending WTI crude futures up roughly 3.7% to around $82 a barrel by early Wednesday trading. Energy-driven inflation had already pushed headline CPI above 4%, and the renewed Middle East escalation threatens to keep it there. Chair Warsh has previously told Congress he has no tolerance for high inflation and vowed to make elevated prices 'a thing of the past,' a hawkish signal that has kept hike odds elevated even as most forecasters expect the Fed to stand pat while it waits for more data.
Compounding the volatility is a historic selloff in South Korean equities. SK Hynix reported record Q2 revenue of 79.32 trillion won, equivalent to $54.53 billion, up 257% year over year, and achieved an all-time high operating margin of 76%. Yet the result still missed analyst consensus projections, and the KOSPI dropped as much as 12.6% on Wednesday, extending Tuesday's nearly 11% plunge for a two-day decline that Bloomberg reported exceeded 16% -- the worst such fall in the index's history. SK Hynix and Samsung together account for more than half of the KOSPI's total weighting, making the index a near-direct proxy for global AI hardware sentiment.
After the U.S. market close Wednesday, Microsoft and Meta report their most anticipated earnings of the year. Analysts expect Microsoft fiscal Q4 revenue of approximately $87.67 billion and earnings per share near $4.24, while Meta is expected to report Q2 EPS of $7.18-$7.24 on revenue of roughly $60 billion. Wall Street is less concerned with whether either company beats those estimates than with what they say about future AI capital expenditure. Meta has already raised its full-year capex outlook to $125 billion-$145 billion, and Microsoft's projected 2026 capex stands near $190 billion. The combination of the Fed call, the oil spike, and tonight's AI earnings guidance makes Wednesday one of the most consequential afternoons of the business year.
South Korea's benchmark KOSPI index fell as much as 12.6% on Wednesday, on top of a nearly 11% plunge on Tuesday, putting the two-day decline above 16% and marking the worst such stretch in the index's recorded history. SK Hynix reported record Q2 revenue of $54.53 billion and a 76% operating margin but still missed analyst consensus expectations compiled from 14 South Korean brokerages, confirming that the AI hardware trade is being repriced sharply lower. The Korea Exchange triggered a circuit breaker for a second consecutive session, and the damage spread to Japan, where Kioxia dropped 16.5% and the Nikkei 225 fell roughly 3.9%.
WTI crude futures advanced roughly 3.7% to around $82 a barrel in early Wednesday trading after Iran launched surprise attacks on U.S. forces in the Middle East, adding fresh energy-price pressure just hours before the Fed's rate announcement. The renewed escalation complicates Chair Warsh's calculation: headline inflation running above 4% is largely energy-driven and could ease if tensions abate, but core inflation near 2.9% is the figure that would more decisively push the Fed toward a hike. U.S. stock futures held modest gains despite the oil move, with S&P 500 futures up about 0.2% and the Nasdaq 100 flat.
Microsoft reports fiscal Q4 2026 results and Meta reports Q2 2026 results after Wednesday's close, capping the busiest two-day stretch of earnings in years. Analysts already expect both companies to beat headline revenue and EPS estimates; the real market-mover will be forward guidance on AI capital spending. Meta has boosted its projected 2026 capex to $125 billion-$145 billion, while Microsoft's 2026 capex is projected near $190 billion with fiscal 2027 spending potentially reaching $255 billion-$260 billion. Alphabet's negative free cash flow print last week set a nervous precedent, and investors will scrutinize whether Azure growth and Meta's ad business can justify the scale of spending.
Visa announced plans to eliminate roughly 2,600 positions, about 7% of its total workforce of 34,100, with cuts concentrated in technology and product teams. CEO Ryan McInerney framed the move as an efficiency drive to reinvest in higher-priority areas including stablecoin settlement, cross-border payments, and affluent-consumer services. The layoffs reflect a broader pattern across the payments and fintech sector: Mastercard announced a 4% workforce reduction earlier in 2026, and Block cut close to half its headcount in February. AI automation of software development work is accelerating the trend, though Visa indicated it was not the sole driver.
The grace period for goods already in transit before the July 24 effective date of new Section 301 tariffs expired on July 28, meaning small importers are now fully subject to the 10%-12.5% duty rates imposed on goods from 60 trading partners accused of inadequate forced-labor import controls. The new rates layer on top of existing Most Favored Nation duties and, in some categories, other trade remedies, creating a compounding cost structure that analysts say most small firms have not yet fully modeled. USTR has not specified a predictable review timetable for rate adjustments, meaning importers should treat the current duty map as subject to further change before year-end.
Fast-fashion platform Shein confirmed it is under investigation by the Federal Trade Commission as the company moves toward a Hong Kong IPO. The disclosure adds regulatory complexity to an already fraught listing process for the Chinese-founded retailer, which has faced sustained scrutiny over supply-chain practices, data handling, and its use of the de minimis import exemption. The FTC investigation represents an additional compliance and reputational risk for the brand's U.S. business operations at a moment when the broader tariff environment is also tightening on its sourcing markets.
Small businesses face a compounding cost squeeze heading into August: WTI crude at approximately $82 per barrel keeps fuel, freight, and petrochemical-derived input costs elevated, while the newly effective Section 301 tariffs add 10%-12.5% duty layers on imported goods from 60 trading partners. Federal Reserve Bank of New York research published in July found that small businesses facing tariff challenges in 2025 were significantly more pessimistic about revenue and employment in 2026, and that most responded by passing higher costs to customers. With the Fed holding rates at 3.50%-3.75% and borrowing costs staying elevated, the combination of energy prices, tariffs, and tight credit is making near-term planning especially difficult for operators with thin margins.
Procter & Gamble is reporting fiscal Q4 2026 results Wednesday morning before the open, with consensus expecting revenue of approximately $21.4 billion and earnings per share of $1.41, a roughly 5% year-over-year decline tied to higher commodity and tariff costs. The company had previously signaled that full-year EPS results would land toward the lower end of its $6.83-$7.09 guidance range due to a challenging geopolitical and economic environment. P&G's results are a useful real-time read on whether cost pressures in consumer goods are stabilizing or still accelerating -- directly relevant to any business selling into the consumer market.
The Federal Reserve's 2 p.m. ET announcement is the single most actionable event for any business with variable-rate debt, a pending credit line renewal, or a capital purchase decision. A hold at 3.50%-3.75% keeps the current environment stable; even a 25-basis-point hike would flow through to prime-linked borrowing within days. The roughly 30% market-implied probability of a hike is high enough that locking in rates before the announcement -- where possible -- is a reasonable defensive move. Watch the press conference closely for Warsh's tone on future hikes, since this meeting includes no updated dot plot.
If your business imports goods from any of the 60 countries now subject to the new Section 301 forced-labor tariffs, the grace period is over and the full 10%-12.5% duty layer is live. Review your customs broker's classification of every SKU, update landed-cost models, and determine whether contracts with customers or suppliers need renegotiation. Additionally, oil near $82 per barrel means fuel surcharges, freight quotes, and any petroleum-derived input costs are under renewed upward pressure. Operators who can lock in forward freight or energy contracts have a window to do so before the Iran situation resolves -- or escalates further.