Read the Fed minutes. Check the date: earnings and multiples for SPY and QQQ
By @engtmk · Pre-release research · 7 October 2026
This analysis was prepared before the scheduled 18:00 UTC / 2 p.m. ET release of the September FOMC minutes. It sets out what to examine; it does not report their contents.
Monday’s research asked whether expanding orders would survive rising costs as profitable sales. Today’s question moves one step further: what will investors pay for those earnings when the policy outlook is changing?
The published eToro preview makes a chronological point with an investment consequence. The minutes being released today describe a meeting held three weeks ago. They may clarify the reasoning behind September’s decision, but they cannot be read as a response to economic reports published afterwards.
For SPY and QQQ, a friendlier rate outlook only answers part of the valuation question. The earnings supporting the multiple still have to hold up. Conversely, higher yields need not produce falling equities if better earnings more than offset the valuation pressure. The useful task is to separate those two effects rather than turn every policy headline into a buy or sell signal.
One release date, several information dates
The Federal Reserve’s October calendar schedules the September 15–16 meeting minutes for 7 October at 2 p.m. ET, and the next FOMC meeting for 27–28 October.
The 16 September statement already establishes the decision: a 25-basis-point increase in the federal funds target range to 3.75%–4.00%. That is a policy-rate range, not a Treasury yield. The minutes may add detail about the discussion; the increase itself is not new information today.
| Event or report | Reference period | Publication or decision date |
|---|---|---|
| FOMC decision | Meeting of 15–16 September | 16 September |
| Personal income and outlays, including PCE inflation | August | 30 September |
| Employment Situation | September | 2 October |
| ISM Services report | September | 5 October |
| FOMC minutes | Meeting of 15–16 September | Scheduled 7 October, 18:00 UTC |
The distinction is particularly important for August PCE. Its reference month predates the meeting, but its publication came afterwards. Policymakers could have had forecasts and other information about August conditions. They could not have evaluated that subsequently published release as an observed report at the September meeting.
This does not make minutes irrelevant. A fuller account can reveal how officials weighed competing risks and what evidence might change their assessment. It does make it necessary to compare that reasoning with the information now available.
What arrived after the meeting
Three releases make a simple policy narrative difficult. They measure different things and should not be added together as though they were a single indicator.
Spending and inflation. In the BEA’s August release, published 30 September, core PCE prices rose 0.2% monthly and 3.0% yearly; headline inflation was 0.3% monthly and 3.4% yearly. Real consumption increased 0.6%, while real disposable income was flat. Nominal spending grew 0.9%, versus 0.3% for disposable income, and the saving rate was 4.1%.
That is evidence of real spending growth alongside a question about its income support. It is not proof that households collectively withdrew from an existing savings stock: a positive saving flow can coexist with spending growth outpacing income growth. The 30 September analysis explored that tension.
Employment and wages. The BLS September report, released 2 October, showed 29,000 additional payroll jobs, 4.2% unemployment, and 60,000 of combined downward revisions to July and August relative to the preceding release. Private average hourly earnings rose 0.1% monthly and 3.0% yearly.
Slower wage growth may ease one cost pressure, while weak hiring can constrain the growth of customer income. Neither establishes a company-level earnings outcome. September wage growth also cannot be compared with August inflation and labelled a same-month real-wage result. Friday’s research examines the retailer implications.
Services demand and purchasing costs. The September ISM Services report, released 5 October, put PMI at 54.9 versus 55.4, new orders at 59.8 versus 60.9, prices at 74.0 versus 72.6, and employment at 50.1 versus 47.8. Its Prices section identifies the reading as the highest since July 2022.
The PMI and orders figures signal continued expansion at a slower indicated pace. Prices-paid pressure strengthened. These are diffusion indexes describing reported direction and breadth, not percentage increases in output or prices. The prices index is neither CPI nor a direct estimate of corporate margin compression.
Together, the releases leave room for both resilience and caution: spending increased, hiring was weak, services continued expanding, and purchasing costs remained an issue. None alone dictates the October policy decision.
Why SPY and QQQ fit this question differently
State Street describes SPY as tracking the S&P 500’s price and yield performance before expenses, with exposure across all eleven GICS sectors. Invesco describes QQQ as tracking the Nasdaq-100, comprising the 100 largest non-financial companies listed on Nasdaq. QQQ is not a pure technology fund.
These constructions matter. SPY spans businesses with different demand, funding and margin drivers, including financial companies. QQQ’s non-financial universe excludes that part of the comparison. Neither index is an equal-weight survey of the domestic economy, and national services data does not directly forecast either index’s earnings.
For businesses whose valuation depends heavily on cash expected far in the future, changes in the required return can have a larger present-value effect, all else equal. That is a valuation mechanism, not a measured claim about QQQ’s current interest-rate sensitivity or a guarantee that it will outperform SPY when yields fall.
For both funds, the earnings questions run through the underlying businesses: are sales volumes holding up, can cost increases be managed, and does capital spending generate sufficient future cash? The mix of answers matters more than attaching a single macro label to the whole index.
A numerical baseline, with its limits
State Street reports a SPY fund Price/Earnings Ratio FY1 of 20.84 as of 6 October 2026. Its definition uses a weighted harmonic average of constituent prices divided by forecast one-year earnings per share, including negative and positive outliers. This is a dated provider measure, not today’s live multiple or a guaranteed earnings outcome.
That figure provides a concrete starting point for asking what earnings the price requires. It does not, by itself, establish that SPY is expensive or cheap. A fair-value judgment also needs an earnings assessment, a comparable history, and the return required for taking risk.
No directly comparable current QQQ forward multiple is established here, so this article does not rank the two funds by valuation. Mixing a trailing multiple for one with a forward multiple for the other would create an apparent comparison without a consistent earnings denominator.
The same care applies over time. A multiple can rise because prices rise, because earnings estimates fall, or both. A lower reported multiple can reflect improving earnings forecasts rather than a cheaper entry price. Price and earnings changes need to be read separately.
How policy reaches earnings and multiples
The Fed’s explanation of asset valuations distinguishes expected future payoffs from the discount rate applied to them, including compensation for risk. That older publication is used for the mechanism, not as current market evidence.
For today’s research, three channels matter:
| Channel | First effect to examine | Evidence needed before drawing an equity conclusion |
|---|---|---|
| Required return | A changed rate outlook can alter what investors pay for future earnings | Longer-term yields and risk compensation, alongside a consistently defined multiple |
| Customer demand | Household and business spending affect revenue and operating leverage | Volumes, orders, guidance and earnings revisions across constituents |
| Costs and funding | Wages, purchased inputs and financing terms affect margins and cash flow | Margin guidance, debt maturities, refinancing costs and cash conversion |
The federal funds target is not the equity discount rate. Long-term yields also reflect expectations about inflation, growth and term premiums; equity investors require compensation for uncertainty. A softer expected Fed path can therefore coexist with a less favourable earnings outlook or a higher equity risk premium.
Nor does a lower policy rate immediately reduce every company’s interest bill. The effect depends on floating-rate debt, refinancing dates and cash balances. A company with cash can earn less interest income as short rates fall. These differences are reasons to inspect constituent disclosures, not assume that one policy change produces the same profit effect everywhere.
When rate relief is not enough: a worked example
Consider a hypothetical index, starting with earnings of 100 and a price/earnings multiple of 20. Its price is 2,000. The following are assumed one-period changes, not forecasts for SPY, QQQ or the Fed.
| Assumed outcome | Earnings | Multiple | Implied price | Price change |
|---|---|---|---|---|
| Earnings grow; multiple unchanged | 105 | 20 | 2,100 | +5.0% |
| Earnings fall; multiple rises | 90 | 22 | 1,980 | −1.0% |
| Earnings grow; multiple falls | 108 | 18 | 1,944 | −2.8% |
A 10% multiple expansion does not fully offset a 10% earnings decline: 0.90 × 1.10 = 0.99. Starting from a 10% earnings decline, the multiple would need to rise about 11.1% simply to preserve the original price.
The example isolates the earnings/multiple relationship. It excludes dividends, fees, changes in index composition and tracking effects, so these are not ETF total-return estimates. It also assigns no number of multiple points to a basis-point change in rates.
Three readings to test, not three predictions
Disinflation with resilient earnings. Subsequent inflation evidence softens while demand, margins and earnings forecasts remain sound. A lower required return could then reinforce earnings growth. The counterargument is that prices may already anticipate much of the improvement. Evidence would need to show both earnings delivery and the valuation paid for it.
Rate relief driven by weaker demand. Hiring and spending deteriorate, earnings expectations fall, and policymakers face less inflation pressure. Multiples may receive support, but profit downgrades or increased risk compensation can offset it. The worked example shows why a favourable rate headline alone is insufficient. Resilient revenue and cash generation would challenge this adverse interpretation.
Persistent inflation with continued expansion. Demand holds, but purchasing pressure proves difficult to absorb and policy remains restrictive. Strong nominal revenue could coexist with weaker margins and lower multiples. The strongest counterargument is productivity: firms may manage costs and grow earnings fast enough to outweigh the rate pressure. A persistent decline in inflation alongside stable margins would weaken this restrictive-policy scenario.
No probabilities are assigned. These are tests for incoming evidence, not claims about current market pricing. Without a verified futures snapshot, the article makes no statement about the odds of an October hike, hold or cut.
What to read next
At 18:00 UTC today, the minutes can be checked for how officials framed inflation persistence, employment risks and the conditions that would alter their assessment. Any such findings must be attributed to the September meeting. A new nuance in the record is not automatically a new October commitment.
The next dated checks are:
- 14 October: September CPI and real earnings, scheduled for 8:30 a.m. ET in the BLS release calendar. These will help put prices and wages on a common reference month.
- 27–28 October: the next FOMC meeting, when policymakers will have a later information set.
- 29 October: September PCE, scheduled by BEA for 8:30 a.m. ET—after that FOMC meeting. The next official monthly PCE release should not be assumed to arrive before the decision.
Alongside those dates, company earnings disclosures should be tested for demand, recurring margins, cash generation and revisions to the outlook. For SPY, the breadth of earnings resilience matters. For QQQ, the test includes whether the businesses supporting growth expectations can deliver sufficient profit and cash, rather than relying on a more generous multiple.
The conclusion is to wait for evidence on both earnings and valuation. The minutes can improve the explanation of policy; newer data and company results determine whether that explanation still fits. Neither earnings growth nor the multiple deserves to be considered in isolation.
Sources and freshness
Research checked 7 October 2026, before the scheduled 18:00 UTC minutes release. This is the pre-release expansion of the revised eToro post published at 15:04 UTC. It contains no account of the unreleased minutes and no post-release market reaction.
Primary sources are linked near the claims: Federal Reserve calendar and September decision, BEA August income/outlays, BLS September employment and October calendar, ISM’s September report, and the State Street and Invesco product disclosures. The Fed’s May 2021 valuation discussion supplies only a durable conceptual explanation.
The ISM page’s retrieved title says 2025, but its body, dated tables and Prices section identify September 2026; those are the evidence used. SPY’s forward-P/E observation is dated 6 October and should not be read as a live quote. QQQ’s current comparable multiple, live policy probabilities and a full index earnings forecast are not supplied; no conclusion here relies on inventing them.
The cover uses symbolic document folders, not reproductions of official reports. The scenarios and arithmetic are analytical illustrations. No holding, trade, portfolio weight or private disclosure is asserted.
My portfolio and views, not investment advice. This article is for research and education.