US Market Recap: Oracle Rallies in the Session, Alphabet Sinks After Hours, and the Fed Says No Hike

I. Indexes: three up days, each gain smaller than the last

The Russell 2000 was the strongest of the day at +0.41%, beating the big three. Small caps are the most rate-sensitive cohort, and two-year Treasury yields fell 3.95 basis points, easing the front end a little. What held the indexes back was the megacap bloc: Nvidia -1.17%, Apple -0.94% and Meta -1.24% left six of the seven largest names lower, with only Alphabet's 1.34% holding the group up.

All the lift came from chips and the power-and-cooling complex. 257 S&P 500 members rose against 242 decliners, essentially a coin flip; the index closed green because technology contributed about 26 basis points. That also explains why the Nasdaq gained only 0.27%: the winners were smaller-cap memory, optics and liquid-cooling names, while the biggest weights fell.

II. Sectors: eight up, three down, a 1.36-point spread

III. Oracle: a payback schedule written as numbers

At its investor day Oracle put numbers on what it had been avoiding: fiscal 2030 revenue above $225 billion, implying about 35% annual growth at an operating margin above 40%; capital spending peaking in fiscal 2027 and 2028 and declining from fiscal 2029; free cash flow turning positive in the second half of fiscal 2028 and reaching at least $30 billion in fiscal 2029. The line that mattered most was about financing: new borrowing is capped at $20 billion through fiscal 2030, split evenly between equity and debt.

The market had assumed Oracle's free cash flow would still be negative in fiscal 2029. The company burned about $24 billion of cash in the fiscal year through May, and the stock at one point lost more than half its value from a September record high, trading near $115 in July. So the guidance did not change the growth story; it changed where the money comes from. It turned how much more the company would borrow from an open question into a ceiling.

The shares did not hesitate: they closed up 10.73% at 144.54 dollars, the best session since May, adding more than $40 billion of market value, and are still down about 25% this year. The timing is worth a look. The stock traded near $130 for most of the day; the real move came after 2:20pm, and it jumped as much as 13% within minutes of the materials landing. Few investors had positioned for it before the bell.

The spillover into AI infrastructure was stronger than Oracle itself. Vertiv, which builds power and cooling gear, rose 16.48% after third-quarter sales of $4.31 billion, up 61%, with organic orders doubling; Quanta Services added about 5%; CoreWeave rose 7.32% and Nebius 6.96%; fuel-cell maker Bloom Energy gained about 5%. What these companies share is that they get paid when a data center is built, not when a model developer is valued.

IV. Memory: SK Hynix has sold out through 2029

SK Hynix reported third-quarter revenue of KRW 104.62 trillion, up 328%, and operating profit of KRW 83.33 trillion against KRW 11.4 trillion a year earlier, a 632% increase. Revenue crossed KRW 100 trillion for the first time and both figures were records. Three lines from the call mattered more than the numbers: DRAM and HBM capacity through 2029 is fully sold, the shortage is expected to run into 2030, and HBM4 becomes the main product from the fourth quarter. Average DRAM selling prices rose more than 20% from the prior quarter.

The ADR rose 13.30%, adding about $97 billion of market value in a day. The rest of the chain followed: SanDisk +7.66%, Silicon Motion +7.56%, Micron +5.86%, Seagate +4.51% and Western Digital +4.08%. Seagate had reported growth and strong guidance after the close a day earlier and still sold off; it made the ground up here.

V. Megacaps: six down, one up, and the money went smaller

VI. After the close: Azure accelerates, Alphabet's free cash flow turns negative

The difference between the two is not growth, it is where the money comes from. Microsoft spent $45.2 billion on capex this quarter ($45.2B including finance leases, $39.4B excluding), up 30% year over year and still below its own $50 billion guidance — the CFO attributed the gap to delayed third-party capacity. The money goes mostly into short-lived assets: Intel chips and Nvidia GPUs depreciate quickly and can be redeployed, so the book pressure is lighter than building long-lived infrastructure. Free cash flow was $18.6 billion, above the $8.5 billion consensus; among the hyperscalers Microsoft is the only one still expected to be cash-flow positive next year.

Alphabet's problem is heavier. Cloud revenue doubled, Gemini app monthly users reached 1 billion and search revenue grew 12%, so every line was growing. But search at $63.4 billion came in below the $65.0 billion expected, capex rose 114.4% to $51.4 billion, 2027 spending will increase significantly to more than $300 billion, and long-term debt went from $21.6 billion a year ago to $125.1 billion. Half of the net income decline came from equity investments swinging to a loss: a gain of $10.7 billion a year ago became a loss of $8.7 billion, cutting diluted EPS by $0.55.

Put together, that is the day's most important information: total AI capex has not fallen, but the payer has shifted from shareholders to creditors. The market priced it simply, rewarding capital efficiency and punishing a stretched balance sheet. Upstream names Nvidia, Broadcom and TSMC fell 1.7% to 1.9% after hours and Micron lost 2.16%, all sentiment rather than orders.

VII. A second after-hours thread: Marvell in talks for Lumentum

Bloomberg reported after Wednesday's close that Marvell is in advanced talks to buy Lumentum, with an announcement possible as soon as next week. No final agreement is signed, timing and other details could still change, and neither company commented. On Bloomberg's market values Lumentum is worth about $83 billion and Marvell about $221 billion; if it lands it would be one of the largest deals in the AI hardware supply chain.

The after-hours pricing is textbook M&A: the seller rises, the buyer falls. Lumentum traded more than 15% higher at its best and spent most of the evening up 11% to 12% around $1,024, while Marvell fell 8% and at one point more than 10%. Marvell had closed up 3.32% at $251.65 in the regular session.

The logic sits in the supply chain. Marvell already buys Lumentum's lasers, so owning a critical supplier removes a layer of external dependence; Nvidia earlier this year put $2 billion into each of Lumentum and Coherent and signed multi-year non-exclusive agreements with both. Optical components are the hardest part of this build-out to expand, with new capacity taking three to five years, and Lumentum itself says capacity is sold into early 2029. In the same evening Alphabet was sold for spending more and Lumentum was bought, two prices pointing at the same bottleneck.

VIII. The Fed: on hold, with only two votes to hike

The FOMC held the target range at 3.75% to 4.00% on a 10-2 vote. The two dissents came from Governor Cook and Cleveland Fed President Hammack, and both wanted a 25 basis point increase, not a cut. The statement upgraded its read on growth from moderate in September to strong and kept the line that inflation remains somewhat elevated.

The timeline is easy to miss: the Fed began its first rate increase in three years on September 16, so this month is a pause, not a pivot. Futures after the meeting put the odds of a 25 basis point hike on December 9 at 85.0%, up from 78.3% on Tuesday, with less than 7% for this week. Chair Warsh reiterated the commitment to inflation and noted that credit spreads on some assets had widened and financial conditions had tightened, which is not good news for companies funding data centers with debt.

The market reaction came in two phases. Two-year yields dropped after the statement while the 10-year kept rising; after the press conference the two-year fell further, the 10-year traced a V and the dollar index declined. The closing scorecard: two-year at 4.6975%, down 3.95 basis points, and the 10-year back at 5.02%, up about 3 basis points. An easier front end and a tighter long end is the classic pricing of no hike now, hike next.

IX. Earnings: raised guidance rose, cut guidance fell

Three more technology companies gave direction after the close. Fortinet fell 25.6% after closing down 5.90%, with revenue up 20% to $2.08 billion but the smallest guidance raise of its three this year and a cut to services revenue. ServiceNow fell 16% after closing down 3.00%, with adjusted EPS of 1.00 below expectations and fourth-quarter revenue guided to $4.25 billion to $4.26 billion against $4.36 billion expected. KLA rose 3% after closing up 3.33%, with fiscal first-quarter revenue of $4.14 billion beating $4.04 billion and second-quarter guidance of $4.7 billion.

X. China ADRs: New Oriental's margin stalls at 20%

New Oriental's own numbers were not bad. For fiscal first quarter 2027 ended August 31, revenue was $1.8745 billion, up 23.1% and slightly above the $1.85 billion expected; operating profit was $374.7 million, up 20.5%; net income was $273.2 million, up 13.5%. Two things went wrong. The blended operating margin was 20.0%, a shade below 20.4% a year earlier, because East Buy's livestream commerce is a larger share of revenue and carries thinner margins. And full-year guidance merely reiterated 14% to 18% growth after a 23.1% first quarter, which implies 11% to 16% for the remaining three; deferred revenue up 11.2% says the same thing.

The company also declared a dividend of $0.2 per ordinary share and $2.0 per ADS, payable in two installments. But the market sold the slope of growth, not the level of the quarter. In Hong Kong New Oriental-S fell 7.58%, the worst blue chip of the day. The Golden Dragon index closed down 1.83%, the weakest major asset on the day.

XI. Energy: a refinery strike claim puts crude back above $102

December WTI rose $2.88 to settle at $102.78 a barrel (+2.88%); December Brent rose $1.44 to $115.32 (+1.26%). The spread narrowed from $13.98 to $12.54, which says the move was mostly US crude. Two headlines landed together: Houthis said they attacked Saudi Arabia's Ras Tanura refinery, which Riyadh has not confirmed, and reports said Washington had asked Gulf states to prepare for military action against Iran after the November 3 midterms.

Energy rose 0.41%, the second-best sector, but single stocks did not repeat the 7% to 9% refinery selloff of October 27, when the decline priced progress in Iran talks; this gain is the same variable swinging back. The round trip shows positioning in the Middle East is now entirely headline-driven, one direction a day with no middle ground. WTI settled at $99.90 yesterday, below $100, and is back at $102.78 today; two sessions have given back and then restored the big up-day of October 23.

XII. Cross-asset

XIII. Calendar

• October 29, 8:30am ET: Q3 GDP advance, September PCE and core PCE, weekly jobless claims

  GDP is expected at 3.2%. PCE is the inflation gauge the Fed watches most: if core inflation has not cooled, the 85% odds of a December hike go higher; a clear drop would take them down quickly. All three land within half an hour, the single biggest risk event of the week.
• October 29: European Central Bank rate decision

  EUR/USD closed at 1.1150, above the prior day's 1.1135. If US and European policy keep diverging the dollar index will follow, and a stronger dollar is bad news for gold and emerging markets.
• October 29 after the close: Amazon Q3 results, with Intel the same day

  AWS growth is the last piece of this round of cloud validation. Azure accelerated to 48% and Google Cloud doubled; if AWS comes in well short, the positioning in semiconductor ETFs has to be reworked, because upstream orders depend on the combined capex of all three, not on one.
• November 3: US midterm elections

  Reports that Washington asked Gulf states to prepare for action against Iran after the vote already pushed crude up 2.88% on the day. The election result and Middle East risk overlap in time, so energy volatility should rise before other sectors.
• December 9: the Fed's last meeting of the year

  Futures price an 85.0% chance of a hike, against 78.3% on Tuesday. Warsh also cut the 2027 meeting calendar to 7 and expects only 6 in 2028 — fewer meetings, each one heavier, and less forward guidance.

XIV. Views

• The market bought a payback schedule, not growth
  The $225 billion fiscal 2030 revenue target was already public. What was new was three things: when capex peaks, when free cash flow turns positive, and how much new financing is allowed. Together they answered the question investors had asked for six months — how much more this company intends to borrow. The 10.73% move and the $140 billion of market value added bought the answer itself, not better numbers. The stock is still down about 25% this year, which says the day repaired a financing discount rather than re-rating the business.
• Memory shortages are now contracted through 2029, which changes the nature of the price increase
  SK Hynix says DRAM and HBM capacity through 2029 is fully sold, the shortage runs into 2030, and average DRAM prices rose more than 20% from the prior quarter. The weight of that sentence is in the contracts: pricing moved from spot scarcity to long-term lock-in, and buyers can no longer wait for a discount. Microsoft on the same day attributed a 22% decline in devices and Windows licensing revenue to memory and storage prices, so the cost is already moving downstream. Upstream earns certainty, downstream pays for it, a structure that favors the memory chain and hurts end hardware.
• Alphabet's report changed how AI trades are priced
  Cloud revenue doubled, search grew 12% and Gemini reached 1 billion monthly users, so there was no bad news in the business. What got sold was free cash flow of -$9.1 billion, long-term debt from $21.6 billion to $125.1 billion and 2027 capex above $300 billion. The market had been paying for AI on growth; on this day it started discounting who writes the check. Microsoft rose 3.64% after hours for the opposite reasons: capex below expectations, 75% into short-lived assets, and Azure accelerating. One industry, two balance sheets, two prices. The divergence lasts until the next capex guidance cycle. Lumentum's 12% after-hours gain on the Marvell approach completes the picture: in the same capex dollar, the bottleneck asset gets bought at a premium and the payer gets sold.
• The Fed held, but two votes wanted a hike, and the long end already moved
  In a 10-2 vote both dissents wanted a 25 basis point increase; the statement upgraded growth from moderate to strong; the odds of a December hike went from 78.3% to 85.0%. The tape's answer was an easier front end and a tighter long end, with the two-year down 3.95 basis points and the 10-year back at 5.02%. That combination pressures expensive growth stocks, supports banks and short-duration assets, and explains why utilities fell 0.88% and real estate 0.65% while financials rose.
• China ADRs fell on margins, not on education
  New Oriental grew revenue 23.1%, ahead of expectations, but net income rose only 13.5%, the operating margin slipped from 20.4% to 20.0% because East Buy's thinner-margin commerce is a bigger share, and full-year guidance merely reiterated 14% to 18% after a 23.1% first quarter — implying 11% to 16% for the rest, with deferred revenue up only 11.2%. The market sold the slope. GDS rose 4.60% on compute leasing, so inside one index there were two directions.