The market went its own way, Fed be damned

This was supposed to be a Fed day. Instead, it was a positioning day, a plumbing day, a gamma day, and above all, a reminder that in 2026, the loudest thing on the screen is not the dot plot. It is gold and the sound of geopolitics.

The S&P 500 opened above 7,000, like it had just firmly planted a flag on fresh territory, and yes, Trump did the victory lap. But anyone who has traded through enough “new highs” knows the first print is often the easiest one. The hard part is keeping it. The market, as expected, ran into the invisible glass wall that matters right now: dealer gamma. You could feel it in the tape. Every push higher got cushioned, then sold, then pinned. A celebration at the open, then the familiar grind back into the gravity well.

And it was not just equities doing their own thing. On my morning run the first track on Spotify was Fleetwood Mac, “Go Your Own Way.” Perfect. Rates, FX, and equity index correlations are basically in separate cars on the same highway, each pretending the others do not exist.

Under the hood, today was the old truth wearing a new suit: earnings drive stocks. Not narratives. Not vibes and certainly not the Fed, at least not today. A quick scan of the leaders and laggards was basically an earnings calendar. Semis showed up as the pick and shovel trade still has oxygen. The AI build out continues to hum, hyperscalers keep writing checks, and the capex conveyor belt is still moving. Industrials were more mixed, with some misses and some “order book is fine but margins are a story” energy. Consumer names had pockets of strength where traffic and execution were real. Healthcare took the bruise, helped along by policy noise and margin guidance that reminded everyone the sector is still wrestling the reimbursement machine.

Meanwhile, the index level story looked calm, but the internals were twitchy. Volumes were not screaming, but ETF flows stayed stubbornly elevated, which is another way of saying the market is trading the wrapper more than the product. It is a market built for fast money reflexes, even when the headline index finishes near unchanged.

Then came the Fed, and the Fed delivered what the market demanded most: almost nothing.

Rates held. The statement leaned a touch more confident on growth and the labor market, and still careful on inflation. Powell’s tone was glass half full, but not triumphalist. He talked about tariff impacts on inflation working through by mid 2026, and the market’s reaction was basically, “Fine, but show me.” The big tell was not the words, it was the choreography. During the presser, algos went feral. One big sell program, then one big buy program, both erased like they never happened. That is not price discovery. That is machines testing liquidity like a cat tapping a glass before it knocks it off the table.

Treasuries swung and then landed close to where they started. The bond market heard “pause can last” and “tariff inflation may fade,” and decided to stop fighting for the day. But here is the part traders should not ignore: the curve has been edging higher this week. Not dramatically. Not a crisis. But enough to feel like the market is quietly raising the bar for how much “good news” it needs before it pays up for duration again.

And the dissents matter, not because they changed the decision, but because they show the political weather around the building. A 10 2 split is not chaos, it is a signal flare. Two governors wanted a cut, including Waller who is widely viewed as a contender in the post Powell world. That is the subtext traders will file away: the next chair era is going to have to persuade, not command. Consensus looks tight. That makes policy inertia a real asset.

Now cue the other half of the day’s script: FX stopped pretending it only listens to central banks.

Trump can talk about dollar softness as if it is a tool. But the Treasury Secretary is the one holding the actual steering wheel, and today Bessent climbed into the driver’s seat and hit the brakes on the intervention fantasy. “Strong dollar policy,” he says. “Absolutely not” intervening in USDJPY, he says. In one sentence he poured cold water on the idea Washington would help Tokyo engineer a stronger yen. So the yen weakened and the dollar bounced, not because the macro story changed, but because the permission structure changed.

This is what the market is really trading in FX right now: the gap between what the President implies and what Treasury is willing to underwrite. Trump is the headline. Bessent is the settlement.

And yet, even with the dollar bouncing, the metals complex kept levitating. That is your tell. Gold pushing through $5400 while the dollar is firmer is not a “weak dollar” story. It is a trust story. It is also a portfolio architecture story. The 60 40 crowd is slowly learning what the last few years have been teaching the hard way: when the bond hedge gets unreliable, money goes looking for a different kind of ballast. So you are watching Western asset allocation drift toward a 60 20 20 mindset, while Asia adds its own pre-Chinese New Year seasonal heat. Different motivations, same outcome. The bid keeps showing up.

Silver was choppier, because silver always is. It trades like gold’s caffeinated cousin. But it still closed higher again, keeping that “metals fever” vibe alive. Powell can say the Fed does not take a macro message from precious metals. Traders do. They just do not call it “macro.” They call it “risk management.”

Oil is the other inflation ghost that will not stay in the basement. Crude is pushing to four month highs, and the geopolitical drip feed is turning into a faucet. Trump talking about Iran again is not just a headline. It is a volatility premium with a pump price translation. If the administration wants an affordability narrative, it is playing with matches near a gasoline puddle.

Natural gas was its own weather driven beast, spiking into contract expiry chaos as storms hit production and heating demand. That is not a macro trend, it is a reminder that commodities still have teeth when you get the wrong meteorology at the wrong time.

And hovering over all of this is the earnings main event. Mega cap tech is the real liquidity engine of this market, and tonight is where the tape either confirms the AI build out is productive, or admits it is expensive.

The setup is clean and uncomfortable at the same time. Mega cap tech looks cheap on price to earnings if you believe earnings are the right lens. But free cash flow is the skeleton in the closet because capex is eating it. So the valuation debate is not academic. It is the core question. Are these companies compounding machines that are temporarily reinvesting, or are they building cathedrals that will take longer to pay back than the market has patience for?

Zoom out and you get the real story of the day. Markets are broadly stable because the fundamental backdrop is still supportive enough. The Fed is not tightening, the economy is not rolling over, and earnings are not collapsing. Add in tax refunds and deregulation chatter and you get a floor under risk. But above that floor is a ceiling made of geopolitics and policy uncertainty that flares every 24 to 48 hours. So we trade the range, we respect the gamma, and we listen to the flows.

The part I keep coming back to is this: the dollar selloff has not been a crisis of confidence in the dollar itself. It is the symptom, not the disease. The disease is fiscal unease, policy noise, and a buy side that is quietly raising hedge ratios because it senses Washington likes the idea of a weaker dollar, as long as it is not too fast and not too ugly, a pseudo Mar-a-Lago Accord.

And if the buy side has decided to do that, it makes no sense to stand in the way. Hence, FX is a game of flow, not differentials, these days.

That is the trader’s takeaway from a day that looked like nothing on the surface. The Fed held. The S&P stalled. The dollar bounced. The yen sagged. Gold still climbed. Oil still climbed. Everything went its own way.

Which is exactly what markets do when the narrative is loud, but the real driver is positioning.

Tesla ripped higher not because the quarter was great, but because the story finally chose a lane.

On the surface, this was a messy print. Revenues slipped, EV volumes stayed soft, free cash flow disappointed, and the core auto business continues to grind through a maturing market with thinner margins and fewer policy tailwinds. This is no longer an open-road EV story. It’s a knife fight for demand.

But the market barely lingered there.

Instead, investors skipped the present tense and went straight to the footnotes. Tesla quietly disclosed a $2 billion investment into xAI, and that single line reframed the entire quarter. The stock sold off on the numbers, then reversed hard once traders realized what Tesla was really pitching: this is no longer a car company trying to sound like an AI company. It’s an AI company using cars to fund the transition.

Margins actually surprised on the upside, helped by Model Y mix and cost discipline, which bought Musk time. Energy did the heavy lifting again, posting record storage deployments and reinforcing that Megapack is becoming a real earnings ballast, not just a side hustle. That business is now tethered directly to data centers and AI infrastructure, which means Tesla has quietly embedded itself into the power backbone of the AI economy.

But the real optionality lives elsewhere. Robotaxis, Optimus, unsupervised FSD. Still long dated. Still regulator dependent. Still execution heavy. But now explicitly backed by an in-house AI arms race rather than outsourced ambition. The xAI tie-up turns Tesla’s AI narrative from aspirational to operational, even if it drags capital intensity higher in the near term.

This is why the stock moved. Not because the quarter was clean, but because the roadmap was clarified.

Tesla is asking investors to tolerate a stagnant auto business today in exchange for exposure to physical AI tomorrow. The market didn’t fully buy it, but it nodded. A muted upside move, smaller than options implied, but meaningful in context.

In short, Tesla didn’t beat expectations. It shifted the frame.

And in this market, framing is currency.

Meta ripped higher not because spending fears disappeared, but because ads paid the cover charge.

This quarter was supposed to be a referendum on Zuckerberg’s spending reflex. Instead, it turned into a reminder that cash flow still buys patience.

The numbers did their job. Revenues beat cleanly, ad growth reaccelerated, impressions surged, and the Family of Apps kept printing money like a well-oiled toll booth. That gave the market just enough comfort to look past the part that should have scared it senseless.

Because the capex number was staggering.

Meta effectively told investors it plans to double down again, with 2026 capital spending north of $115 billion and potentially as high as $135 billion. Infrastructure, compute, talent. All in. No hesitation. The Superintelligence bet is not a side project, it is the balance sheet.

The kneejerk reaction was textbook. The stock dumped on the headline, algorithms sniffed panic, then something important happened. Buyers showed up. Hard. META reversed nearly $100 off the lows, not because the spending got smaller, but because the revenue engine proved it can still outrun the burn.

That is the difference versus last quarter. Back then, capex looked like faith without proof. This time, ads showed up with receipts.

Reality Labs is still a sinkhole, margins compressed, and the return on this capital remains theoretical. None of those questions were answered tonight. They were deferred. Again.

And that’s the point. Meta didn’t resolve the debate. It postponed it.

As long as ad growth stays firm, investors are willing to finance Zuckerberg’s ambition and squint at the ROI later. But make no mistake, this is a tolerance trade, not a conviction one. The moment ad momentum wobbles, that capex figure stops looking visionary and starts looking reckless.

Meta jumped because the cash machine is still humming.

The bill for all this spending just hasn’t arrived yet.