Fed Holds Rates
The FOMC left interest rates unchanged, as expected, weighing high inflation against a strong economy. The vote was 10-2. Lisa Cook and Beth Hammock wanted another quarter-point hike because inflation stays well above the Fed's 2% target.
Chair Kevin Warsh said the Fed stays committed to price stability and that policymakers are actively debating the right path forward instead of just holding course. He announced a change to how the Fed works: starting next fall, the central bank will still hold eight meetings a year but will give one over to a wider talk on monetary policy strategy rather than a rate decision. Warsh expects just six rate-setting decisions a year by 2028, down from the current eight scheduled a year. He said this gives policymakers more time to read incoming data between meetings.
Warsh gave little guidance on the next move, leaving markets focused on a possible December hike. The Fed watch tool now puts that at an 85%-plus probability.
Oracle (ORCL) Sets FY2030 Goals
At its investor day, Oracle (ORCL) targeted at least $225 billion in yearly revenue by fiscal 2030. That implies 35% average yearly growth, earnings per share of $21 or more, and operating margins above 40%. The company expects free cash flow to turn positive in the second half of fiscal 2028 and reach more than $30 billion in fiscal 2029. It will cap added capital raises through 2030 at $20 billion while it keeps spending heavily on AI cloud infrastructure.
The outlook puts focus on whether Oracle (ORCL) can turn rising AI demand into profitable growth while managing the huge cost of building capacity and easing investor worries about financing and cash flow. Shares jumped more than 12% on the first disclosure and ended the day about 10.6% higher.
Memory Supply Race: SK Hynix and China
SK Hynix (000660.KS) earnings stood out for long-term deals covering more than half its capacity for 2027 and 2028, giving memory makers more earnings visibility. Reports suggest Chinese firms Alibaba (BABA), Tencent (0700.HK), and Baidu (BIDU) have approached South Korean DRAM makers about supply contracts stretching beyond the standard 5 years to up to 10 years. This is market chatter for now, but it shows the race between the US and China to lock in capacity, and it points to China's push to supply its own home market.
Separately, Chinese DRAM maker CXMT has turned down Apple (AAPL) and other foreign customers to focus on supplying its domestic market. This is a supply-constrained market, and these memory names should keep outperforming until software brings more efficiency. Prices are not falling, but the rate of increase is slowing. At some point the market could shift from shortage to a glut as companies add capacity. For now, memory companies enjoy a very favorable pricing environment.
What's Coming Tomorrow
Two key economic releases could move markets: the PCE and GDP reports. PCE is expected to have sped up in September as oil and fuel prices surged, following a string of hot inflation reports. Overall PCE is expected to rise about half a percent month over month, with annual inflation rising to 3.7% from 3.4%. Core PCE is also expected to rise month over month and sit at 3.1% year over year. Two items in focus: signs that businesses are passing higher fuel prices to consumers, and how the data center buildout has affected computer component prices.
Third-quarter GDP growth is expected between 3.2% and 3.5%. The Atlanta Fed estimated 3.4% yesterday.
Earnings make it a big day. Amazon (AMZN) is the main report. Samsung (005930.KS) reports tonight; Caterpillar (CAT), Eli Lilly (LLY), Intel (INTC), SanDisk (SNDK), and Starbucks (SBUX) report in the morning, covering tech and consumer. The ECB has a rate decision tomorrow and, like the FOMC, is expected to hold.
