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Starbucks (SBUX) beat earnings with adjusted EPS of $0.50 versus $0.44 expected and 6.2% global comparable store sales growth as CEO Brian Niccol declared “the turn in our turnaround,” while Coca-Cola (KO) posted $0.86 EPS with 12.07% revenue growth and raised comparable EPS guidance to 8%-9%, General Motors (GM) delivered $3.70 EPS versus $2.62 expected and raised full-year guidance to $11.50-$13.50 with a $500M boost from a Supreme Court ruling on IEEPA tariffs, and UPS (UPS) beat with $1.07 adjusted EPS but only reaffirmed its $89.7B revenue outlook citing tariffs and trade policy risks.
The Federal Reserve is expected to hold rates at 3.5%-3.75% while Jerome Powell’s uncertain future as Chair dominates the narrative, with Polymarket traders pricing a 99.5% probability he exits by May 31, 2026, creating tension around whether strong earnings and sticky headline inflation will shift policy expectations.
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Charles Schwab's market update Wednesday morning landed on a single piece of guidance for clients heading into the Fed decision: "Traders need to be really careful here, in my view." The caution makes sense. The Federal Open Market Committee is widely expected to pause in the 3.5% to 3.75% range for the third consecutive meeting, which means the real action will come from Chair Jerome Powell's press conference and any signal about his own plans.
Powell's term as a Fed governor runs until early 2028, so he can remain on the Board even after his chairmanship ends, despite months of harsh criticism from President Trump and a recently closed Justice Department criminal investigation that brought no charges. As Schwab framed it, "It's possible Powell will decide to remain, denying Trump another seat pick for the time being." Polymarket traders are pricing roughly a 99.5% probability that Powell is out as Chair by May 31, 2026, with Kalshi's rate markets clustered around the 3.50%-3.75% range through April 2027.
Schwab flagged a yellow flag in the season: companies are beating, but relatively few have raised guidance despite mostly solid results, perhaps because of oil and geopolitics. Wednesday's reports illustrate the split.
Starbucks (NASDAQ:SBUX) beat on both lines, with adjusted EPS of $0.50 versus $0.44 expected and global comparable store sales up 6.2%. CEO Brian Niccol called it "the turn in our turnaround." The stock climbed 6% in postmarket trading and is up 21.66% over the past month.
Coca-Cola (NYSE:KO) posted EPS of $0.86 with 12.07% revenue growth and lifted comparable EPS growth guidance to 8%-9%. UPS (NYSE:UPS) beat with adjusted EPS of $1.07 but only reaffirmed its $89.7 billion revenue outlook, and CEO Carol Tomé flagged tariffs and trade policy as ongoing risks. General Motors (NYSE:GM) blew past estimates at $3.70 versus $2.62 and raised full-year adjusted EPS guidance to $11.50-$13.50, helped by a roughly $500 million favorable adjustment tied to a U.S. Supreme Court ruling on IEEPA tariffs.
April consumer confidence printed at 92.8 versus 89.2 expected, the highest reading since late last year. Q1 GDP came in at 2.0%, a rebound from Q4 2025's 0.5%. March PCE showed headline inflation accelerating to 3.5% year-over-year on a 11.56% monthly surge in energy, while core PCE held at 3.2% with month-over-month moderation to 0.29%.
That mix, sticky headline inflation, cooling core, and a politically charged Chair, is exactly why Schwab is telling clients to keep position sizes honest. Listen to Powell's tone, and watch whether he tips his hand on staying past May 15.
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