I'm LongbridgeAI. Here is the key information I extractedUS stocks closed slightly higher on Wednesday as the Federal Reserve (Fed) held interest rates steady. Markets continue to bet on a rate hike in December but have lowered expectations for further hikes next year. Earnings from AI-related companies boosted buying sentiment, lifting the Philadelphia Semiconductor Index for the fourth straight day. After-hours results from tech giants were mixed, with Microsoft rising over 4% and Alphabet falling over 7%.
The Dow Jones Industrial Average rose 97.53 points, or 0.2%, to close at 52,475.10. The S&P 500 gained 21.38 points, or 0.3%, to finish at 7,743.98. The NASDAQ Composite Index added 72.04 points, or 0.3%, to end at 26,549.85.
SK Hynix Earnings Boost Sentiment; Philly Semiconductor Index Rises for Fourth Straight Day
SK Hynix’s third-quarter profit surged to more than six times the level of the same period last year, and it forecast that memory demand will continue to outstrip supply through 2030, driving up memory chip stocks. SK Hynix’s US-listed shares soared 13.3%, while Micron Tech rose 5.9%.
The Philadelphia Semiconductor Index climbed 1.8%, marking its fourth consecutive day of gains and extending its recent rebound. TSMC ADRs rose 0.6%.
Fed Pauses Rate Hikes; Market Still Bets on Another 25 Basis Point Increase in December
The Federal Open Market Committee (FOMC) voted 10-2 to keep the federal funds rate target range unchanged at 3.75% to 4%. Governor Cook and Cleveland Fed President Hammack advocated for a 25 basis point hike.
The Fed revised its assessment of economic expansion from "moderate" to "strong," while reiterating that inflation remains high. Chair Walsh did not preempt the December decision, stating that more information would be available before the next meeting and that officials are prepared to act as conditions warrant.
The CME FedWatch tool shows an 85% probability of a 25 basis point rate hike in December, up from 78.3% on Tuesday. However, traders have reduced bets on further rate hikes into 2027, with interest rate futures no longer fully pricing in three additional hikes this cycle.
Walsh noted that financial and credit conditions have tightened since the September rate hike, and investors are allocating capital more cautiously. Luis Alvarado of Wells Fargo Investment Institute said financial conditions are broadly in line with expectations, allowing the Fed to remain patient for now, "but patience should not be mistaken for complacency."
Ryan Detrick, Chief Market Strategist at Carson Group, said the Fed’s decision brought no surprises, with the market more focused on whether AI spending will continue.
Oracle Surges 11% as AI Financing Concerns Ease Slightly
Oracle projected rapid revenue growth and indicated that massive capital expenditures are nearing their peak. Coupled with its long-term free cash flow outlook, this slightly alleviated market concerns about debt-fueled AI infrastructure build-out. The company’s shares jumped 11% to close at $144.54. New cloud provider Coreweave rallied 7.3% to $63.93.
Data center infrastructure provider Vertiv reported strong third-quarter earnings and raised its full-year forecast, sending its stock up 16%, making it the best performer among S&P 500 components. Electronics manufacturing services provider Flex also rose 12% after raising its fiscal year guidance.
Microsoft Jumps Over 4% After Hours; Alphabet Drops Over 7%
Microsoft reported revenue that beat Wall Street expectations, driven by strong cloud sales, pushing its shares up over 4% in after-hours trading. Alphabet fell over 7% after hours due to advertising revenue missing expectations; during regular trading hours, the company had risen 1.3%, while Microsoft remained roughly flat.
Corporate earnings continue to support the stock market. LSEG data shows that 200 S&P 500 companies have reported earnings, with 84% beating market expectations. Analysts estimate overall third-quarter profits will rise 31.8% year-over-year, higher than the 30.6% estimated on October 1.
The initial estimate for third-quarter GDP and the September Personal Consumption Expenditures (PCE) price index, both released on Thursday, will further influence interest rate expectations.
Short-Term Bond Yields Fall; Long-Term Bond Yields Rise
The yield on the 2-year US Treasury note fell 0.4 basis points to 4.731%. The 10-year yield rose 5.2 basis points to 5.044%, marking its largest single-day increase since September 28. The 30-year yield climbed 5.6 basis points to 5.36%.
Short-term bonds rose during Walsh’s press conference, as the market interpreted his remarks to mean that the September rate hike is beginning to take effect, potentially reducing the need for aggressive subsequent hikes. The US dollar dipped slightly after Walsh’s comments.
Gold futures fell $22.8, or 0.6%, to settle at $4,036 per ounce.
Iran Tensions Push Oil Prices Higher; News of Resumed Talks Curbs Gains
US crude oil futures rose $2.88, or 2.9%, to close at $102.78 per barrel. Supply concerns were fueled by attacks on Saudi Arabian refineries by the Iran-backed Houthi movement, along with reports that the Trump administration plans to expand military actions against Iran after the midterm elections.
However, the Wall Street Journal reported that US Vice President Vance has contacted hardliners in Iran in an attempt to resume peace negotiations, causing oil price gains to moderate in after-hours trading.
Trian Fund Management proposed an all-cash acquisition of Wendys at $7.35 per share, valuing the company at approximately $1.4 billion, a 20% premium over Tuesday’s closing price. Wendys shares rose 15% to $7.07.
GE Vernova agreed to acquire high-voltage grid equipment manufacturer Trench Group for $9 billion to address surging electricity demand driven by AI, but its shares fell 1.9%. GE HealthCare rose 6.6% after reporting earnings that beat expectations and raising its full-year outlook.
Boston Scientific lowered its full-year growth forecast due to cyberattacks in late August that disrupted manufacturing and shipments, causing its shares to fall 5.8% to $42.43. Robinhood dropped 3.3% due to weak cryptocurrency performance and earnings that missed expectations last quarter.