U.S. stocks rose Wednesday on optimism that the Federal Reserve will lead the way to a rate cut in September, overshadowing disappointing results from Microsoft. Here’s what’s happening today in the stock market.

Optimism about the Fed

All eyes are on the Federal Reserve on Wednesday as the U.S. central bank wraps up its latest policy-setting meeting.

The Fed is expected to keep its benchmark overnight interest rate in the current range of 5.25% to 5.50%, as has been the case since last July. However, investors expect policymakers to lay the groundwork for a rate cut in September.

Futures indicate a quarter-point rate easing in September, with a remote possibility of a 50 basis point reduction, and 66 basis points of easing by Christmas.

Wall Street’s major indexes ended mixed on Tuesday, with both the S&P 500 and NASDAQ Composite on track to end the month lower. The NASDAQ Composite lost nearly 3%.

Meanwhile, the Dow Jones Industrial Average is on track to end the month up more than 4% as the market has moved away from large tech stocks in favor of smaller, more cyclical-oriented companies.

Microsoft’s Earnings Miss Projections

Aside from the Fed, investors will also have to digest quarterly results from several market heavyweights.

Microsoft (MSFT) shares lost nearly 3% before the market opened after its fourth-quarter cloud revenue growth missed market estimates.

While the company’s global profit barely beat estimates for the June quarter, revenue from Azure, Microsoft’s cloud business, rose 29%, below estimates of 30.2% and slowing compared to the previous quarter’s 31% increase. This occurred despite a $5 billion investment in artificial intelligence during the quarter.

On the flip side, shares of Advanced Micro Devices (AMD) rose 9% before the market opened, while rival NVIDIA (NVDA) added nearly 5% after AMD generated better-than-estimated earnings and forecast positive revenue for the current quarter, citing strong demand in artificial intelligence.

AMD’s earnings highlighted a potential divide in AI-supported profits, where vendors of AI-enabled equipment appear to be outperforming their customers.

Meta Platforms, Next

Meta Platforms (META) is the latest of the large-cap tech giants to release quarterly results this week after the market close.

Meta, which owns and operates Facebook, Instagram, Threads, and WhatsApp, among other products and services, is expected to report a 20% increase in quarterly revenue.

Other companies releasing figures include Boeing (BA) before the bell, as well as Qualcomm (QCOM), Etsy (ETSY), and Carvana (CVNA) just after the session closes.

Crude Oil Prices Soar on Middle East Tensions

Crude oil prices soared on Wednesday as the assassination of Hamas leader Ismail Haniyeh in Iran heightened tensions in the Middle East, raising the possibility of a wider conflict impacting supply.

Multiple media outlets reported that Ismail Haniyeh was killed in an Israeli strike, which could escalate the conflict between Israel and Hamas, which extended into its ninth month in July.

It could also mean an escalation of tensions between Iran and Israel, following a series of missile strikes between the two earlier this year, and stoke fears of all-out war in the Middle East, especially after Israel carried out strikes on Tuesday against the Lebanon-based, Iranian-backed group Hezbollah.

The news has overshadowed data from the American Petroleum Institute, which reported that U.S. inventories fell by nearly 4.5 million barrels the previous week.

If corroborated by official data to be released later in the session, this would mark the fifth straight week of declining U.S. inventories, as demand for fuel remained supported by the travel-filled summer season.