Stocks quiet ahead of Fed meeting, and Microsoft lowers AI quotas

US markets were in a holding pattern this week ahead of the Federal Reserve’s interest rate decision on 10 December, when it is widely anticipated to deliver a quarter percentage point cut.

Prospects for further rate cuts gave impetus to the small cap Rusell 2000 index which gained more than 1% to notch up fresh all-time highs.

The technology-heavy Nasdaq Composite was given a boost after Facebook-owner Meta Platforms said it plans to slash spending on the metaverse by around a third.

Economic data was mixed with ADP private payrolls dropping by 32,000 in November, following a revised 47,000 of job gains in the prior month, while weekly jobless claims fell by 27,000 to a three-year low of 191,000.

Crucially, the delayed November non-farm payrolls report is scheduled to be released on 16 December, after the Fed interest rate meeting.

Microsoft

Shares in Microsoft fell this week after the company reportedly lowered sales quotas for certain artificial intelligence products following weaker than anticipated growth in the fiscal year ended in June 2025.

These so-called “intelligent agents” are designed to automate multi-step tasks used in Microsoft’s Azure cloud division.

This suggests the pace of large-scale enterprise adoption of AI is proving slower and more challenging than initially projected by Microsoft’s internal sales teams.

It lends credence to a recent study by MIT (Massachusetts Institute of Technology) which found that 95% of generative AI pilot projects have failed to deliver measurable financial benefits.

Against this backdrop Microsoft spent a record $35 billion in capital expenditures in its most recent quarter and said spending would rise again in 2026.

Cumulatively, the US tech giants are expected to spend around $400 billion on AI in 2025.

Microsoft shares have lagged over the last 12 months, gaining around 9% versus 19% for the Nasdaq Composite index.

Salesforce

Cloud software firm Salesforce reported third quarter earnings ahead of analysts’ expectations on 3 December and raised its outlook on robust demand for its artificial intelligence agent platform.

The maker of software to track customer relationships now expects fourth-quarter revenue in a range of $11.13 billion to $11.23 billion compared with consensus analyst forecasts of $10.9 billion.

The projected revenue growth of between 11% and 12% includes three percentage points of contribution from Informatica, a data management company Salesforce acquired in November 2025 for $8 billion.

Fourth-quarter adjusted earnings per share is expected to land between $3.02 and $3.04 compared with consensus estimates of $3.04.

The company said its AI agent platform Agentforce had closed more than 9,000 paid deals since launch in 2024 with annualised recurring revenues

up 330% to just over half a billion dollars in the period ended 30 October 2025.

Salesforce shares have performed poorly so far in 2025, falling around 28% compared with a 21% gain in the Nasdaq Composite index, partly on concerns that AI might replace some of its services.

American Eagle

The controversy over American Eagle’s recent advertising campaign with Sydney Sweeney appears to have done the business no harm at all as the company hiked its full-year outlook.

The company flagged a strong start to the all-important fourth quarter alongside its third-quarter earnings and this prompted a double-digit advance for the shares. Like-for-like sales for the final three months of its financial year are expected to grow between 8% and 9% compared with the 2.1% anticipated by analysts.

Earnings per share for the quarterly period ended 30 October came in at $0.53 versus the $0.44 which had been pencilled in and revenue hit $1.36 billion compared with the $1.32 billion forecast.

The festive period is always significant for consumer-facing businesses and investors will have been cheered by the company’s record-breaking performance over the Thanksgiving weekend.

The Sweeney ads and those involving Taylor Swift fiancée and American football player Travis Kelce were both explicitly namechecked by the company when explaining its recent momentum. Management expects to build on this in 2026.