Wall Street rises for third session; Nasdaq adds 0.3% after Fed holds rates
Key Facts
Major U.S. stock indexes closed higher for a third straight session on October 28 after the Federal Reserve kept its target interest rate range unchanged. The S&P 500 rose 0.3%, the Nasdaq gained 0.3% and the Dow Jones advanced 0.2%, according to the Associated Press. The gains were modest compared with Oracle’s move after it announced long-term financial projections and a funding plan at its investor day. The company sees fiscal 2030 revenue at $225 billion or more, equivalent to compound annual growth of more than 35% from fiscal 2026, according to its statement. The announcement was not an earnings report; Oracle presented its outlook and plans for the coming period. Market activity therefore centered on two different factors: a monetary policy decision that left rates unchanged and guidance from a major company on business growth and investment.
The Federal Open Market Committee approved its decision by a 10-to-2 vote, keeping the federal funds target range at 3.75% to 4%, according to the central bank’s statement. Lisa Cook and Beth Hammack voted to raise the range by a quarter percentage point, two dissents that reflected differing views on the committee about the next move. The Fed said "economic activity has been expanding at a solid pace" and domestic spending was "resilient," but also noted that "inflation remains elevated." Those assessments came as the hold was accompanied by a dissent favoring tighter policy, rather than full agreement on leaving policy unchanged. The decision thus carried a dual message for markets: rates did not rise at this meeting, but debate within the committee did not rule out further increases.
At the market level, the Russell 2000 rose 0.4%, or 11.64 points, to 2,830.51, according to the Associated Press. Gains in the major indexes also extended their weekly performance through Wednesday, with the S&P 500 up 1.6%, the Dow Jones up 0.5% and the Nasdaq up 2.3%. The figures reflect continued advances in recent sessions, while daily gains for the major indexes remained modest and closely grouped. In the bond market, the yield on the 2-year U.S. Treasury initially jumped after the Fed decision, then reversed course as traders lowered their expectations for future increases, the news agency reported. The yield move came as markets assessed the decision and the path of interest rates, with two committee members dissenting from the hold.
Oracle reaffirmed its fiscal 2027 outlook for total revenue of at least $90 billion and non-GAAP earnings per share of $8.10, according to its investor relations statement. Alongside its longer-term revenue target, the company said it expects free cash flow to turn positive in the second half of fiscal 2028, then reach at least $30 billion in fiscal 2029. Oracle expects capital expenditures to peak in fiscal 2027 and 2028 before declining in fiscal 2029, supporting its cash flow target. Under the company’s plan, infrastructure spending comes before an improvement in cash flows. Oracle also set a cap of $20 billion on additional capital markets financing through fiscal 2030, split equally between $10 billion in equity and $10 billion in gross debt, excluding refinancing of existing debt.
Speaking about the impact of monetary policy, Fed Chair Kevin Warsh said credit conditions "have tightened for some businesses and households," and that monetary policy was beginning to have an effect. He added that greater reliance by major technology companies on borrowing to build data centers could make higher interest rates more effective at curbing that investment. This underscores the link between the rate decision and technology companies’ plans to finance infrastructure expansion, including data centers that require substantial investment. At the next meeting, scheduled for December 8 and 9, most economists expect a quarter-percentage-point rate increase, according to the Associated Press, while investors put the odds of a hike at about 85%. Before the meeting, the personal consumption expenditures price index was expected to rise 3.6% year over year in September, compared with 3.4% in August, while the core index was expected to increase 3.1%, versus 3%, according to estimates cited by the news agency.