S&P 500 Rises as Fed Holds Rates and Oracle Shares Surge

U.S. stocks moved higher on Wednesday, October 28, as investors assessed the Federal Reserve's decision to keep interest rates unchanged and evaluated corporate earnings and technology-sector growth prospects. The S&P 500 gained 0.2%, the Nasdaq Composite rose 0.1%, and the Dow Jones Industrial Average advanced 122 points, or 0.2%, according to CNBC's market coverage.

The Federal Reserve maintained its benchmark interest rate target at 3.75% to 4%, following a quarter-point increase at its September meeting, the first rate hike since 2023. Investors had broadly anticipated the decision, with federal funds futures indicating a nearly 93% probability of unchanged rates ahead of the meeting, according to CNBC.

The central bank cited the need for additional information to assess inflation and monetary policy. Its post-meeting statement said, "Inflation remains elevated," while emphasizing its commitment to price stability.

The Federal Reserve also explained its approach to evaluating incoming economic data in its statement.

"The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee's 2 percent goal. The Committee will deliver price stability." the Federal Reserve said in its post-meeting statement.

Kay Haigh, global head and CIO of fixed income and liquidity solutions at Goldman Sachs Asset Management, expects policymakers to tighten monetary policy again later in the year.

"We expect the Fed to resume rate hikes in December," Haigh said.

Haigh pointed to persistent inflation risks and the possibility that higher energy prices or stronger economic data could prompt additional tightening beyond the central bank's projected path.

"September's strong CPI print is a reminder that upside inflation risks remain, and the Fed is likely to look to take out further insurance. While the September dot-plot suggests just one more hike, another increase in energy prices or further strong data prints could bring additional tightening into play next year." Haigh said.

Technology shares delivered mixed signals as investors weighed strong corporate forecasts against concerns about the sustainability of artificial intelligence investment. Oracle jumped more than 11% after projecting fiscal 2030 revenue of $225 billion, implying annual growth of 35%, according to CNBC.

Chipmakers also advanced after South Korean semiconductor company SK Hynix reported record quarterly profit. Its U.S.-listed shares climbed 13%, while Micron Technology gained 4%, Arm Holdings rose 3%, and Marvell Technology and Advanced Micro Devices each advanced approximately 2% or more.

Investor attention remained on upcoming results from Alphabet and Microsoft, two members of the so-called "Magnificent Seven" technology companies. Alphabet shares were up more than 1%, while Microsoft shares declined nearly 1% in the trading session described by CNBC.

Bill Northey, investment director at U.S. Bank Asset Management Group, said the immediate business environment for technology companies remained strong, although long-term returns from substantial artificial intelligence spending remained uncertain.

"The near-term cycle remains incredibly healthy," Northey said.

He emphasized that investors must consider whether demand and profitability can persist as companies commit substantial resources to artificial intelligence infrastructure.

"It's really about can it remain durable for many years, and what are the returns to those who are investing significantly today. Will it be universally a profitable endeavor, or will there start to be some winners and losers that emerge there, and we tend to think that it leans towards the latter." Northey said.

Separate market coverage from The Wall Street Journal described a slowdown in technology-led gains after the Nasdaq had rallied nearly 2% over the preceding two sessions. Memory-chip shares remained supported by SK Hynix's results, while broader trading momentum weakened ahead of the Federal Reserve decision.

Analysts at UBS also identified shareholder distributions as a potential catalyst for SK Hynix. According to CNBC, the investment firm raised its estimate for shareholder returns to as much as 60% of the semiconductor company's expected free cash flow from 2027 onward.

UBS analyst Nicolas Gaudois said the stock's valuation already reflected a weaker industry scenario for 2028.

"[The stock's] current share price already discounts a marked downcycle scenario for '28," Gaudois said in a note to clients.

He outlined the firm's revised expectations for capital returned to shareholders.

"Going forward, we reset our expectation up to 60% of [free cash flow] return 2027E onwards." Gaudois said.

Gaudois described the anticipated distributions as a "key positive catalyst" for SK Hynix shares.

Elsewhere, regional bank stocks weakened, with the State Street SPDR S&P Regional Banking ETF falling more than 1%. Truist Financial, M&T Bank, and Huntington Bancshares traded near their session lows, according to CNBC.

Energy markets moved in the opposite direction from the softer regional banking sector. U.S. West Texas Intermediate crude futures rose 2.8% to $102.72 per barrel, while Brent crude gained approximately 1.6% to $115.67.

The yield on the 10-year U.S. Treasury note increased by more than three basis points to 5.024%.

Individual companies also recorded substantial moves. Brinker International gained 15% after raising its full-year adjusted earnings forecast to $13.30 to $13.90 per share and increasing its revenue outlook. Wingstop climbed 15% after reporting adjusted third-quarter earnings of $1.08 per share, above the $1.02 analysts expected, although revenue of $185 million fell short of the $193 million consensus estimate.

Cybersecurity company F5 fell approximately 19% after issuing fiscal 2027 adjusted earnings guidance of $18 to $18.30 per share, compared with a FactSet consensus estimate of $18.03. Piper Sandler also downgraded the stock from overweight to neutral.