FOMC holds rates steady as expected; semiconductor rally drives market gains
Microsoft beats expectations while Alphabet disappoints; tech stocks show mixed after-hours movement
Key Market Trends
① Semiconductor rally led by SK hynix... Reaffirms AI investment capacity
Strong earnings and shareholder return announcements from SK hynix spilled over into U.S. semiconductor stocks.
Citi noted that SK hynix’s expanded share buyback program strikes the right balance between corporate investment and shareholder yields. Investor sentiment was further stimulated by Elon Musk’s remarks regarding the massive memory requirements of the robotics industry.
Anthropic’s robust capital reserves also bolstered expectations for semiconductor demand. As of the end of June, the company held $112.4 billion in cash and $193 billion in short-term investments, with computing and infrastructure spending commitments totaling $417 billion.
Vital Knowledge commented that recent consecutive capital raises by AI companies signal sufficient funding to support the ongoing data center boom.
RBC pointed out that while typical semiconductor upcycles last around 8 to 9 quarters, the current cycle has already entered its 14th quarter and is likely to persist for another 5 quarters.
SK hynix ADRs surged 13% and Micron rose 5%. Memory and equipment stocks, including SanDisk and Lam Research, also posted strong synchronized gains.
② FOMC freezes rates... "Economy expanding strongly"
As widely anticipated, the Federal Reserve kept its benchmark interest rate unchanged. Ten out of the twelve voting members voted in favor of the freeze, while two dissented in favor of a rate hike.
In its policy statement, the central bank upgraded its description of economic activity from expanding at a "solid" pace to a "strong" pace.
Fed Chairman Kevin Warsh assessed that while labor market conditions remain positive, inflation continues to hover at elevated levels. He explained that third-quarter economic growth was driven largely by robust consumer spending alongside active capital expenditures.
The Fed maintained a non-committal stance regarding a potential additional rate hike in December, while noting that shifts in financial and credit conditions have begun to materialize following the September rate cut.
Immediately following the meeting, Treasury yields rose and equities dipped before recovering their upward momentum. The yield on the 10-year U.S. Treasury note settled at 5.01%.
③ Microsoft smiles, Alphabet frowns... Mixed after-hours tech earnings
Big tech earnings released after the closing bell revealed a stark divergence between Microsoft and Alphabet.
Microsoft reported revenue of $92.2 billion, topping the market consensus of $90.7 billion. Azure revenue jumped 48% to $33.17 billion, while capital expenditures came in at $45.2 billion, below expectations of $50.7 billion.
Conversely, Alphabet posted revenue of $127.57 billion, falling short of the $128.2 billion estimate. Earnings per share also missed expectations at $2.12 compared to the projected $3.03.
Although Google Cloud revenue surged 103% to $30.79 billion, free cash flow recorded a deficit of $9.065 billion, widening from a deficit of $5.855 billion in the previous quarter.
In after-hours trading, Microsoft shares advanced while Alphabet tumbled sharply. Alphabet’s weakness dragged down other technology stocks, causing them to surrender part of their earlier gains.
Editor’s Perspective
The earnings report from SK hynix served as a crucial turning point in alleviating recent market anxieties surrounding the "AI peak" theory and fears that the semiconductor cycle has topped out. Projections that supply shortages will persist through 2030, alongside explanations that DRAM and HBM supply volumes are practically secured through 2029, have fundamentally shifted market perception.
Moreover, AI use cases are expanding beyond data centers into robotics and autonomous driving. Given that the number of long-term contract clients has increased from 10 to 14, arguments that the current boom will end abruptly are losing weight.
This does not mean that AI-related market noise has completely dissipated. Since DeepSeek’s emergence last year, debates surrounding AI investment and profitability have recurred. Moving forward, stocks are less likely to rise collectively merely on the label of "AI"; instead, price movements will increasingly diverge based on actual earnings and capital availability.
With the FOMC meeting now concluded, major macro events have passed their peak. Middle Eastern geopolitical developments and international crude oil prices remain the remaining key variables following the midterm elections. Investors should keep potential volatility-driven rallies in mind while closely monitoring oversold market leaders and stocks experiencing sustained institutional accumulation.
Today's Checkpoints
Semiconductors: Following a 13% jump in SK hynix ADRs and a 5% rise in Micron, watch for the continuation of the domestic semiconductor rally.
Big Tech: Assess the impact of Microsoft's solid earnings and Alphabet's after-hours plunge on domestic AI-related equities.
FOMC: Monitor expectations for a potential December rate hike following the rate freeze and the 10-year Treasury yield hovering near 5%.
Oil Prices: WTI rose 2.88% to $102.78—watch for any resurgence in Middle East conflict anxieties.
Supply and Demand: Gauge foreign buying intensity following a 5.37% surge in the MSCI Korea index and a 0.56% gain in overnight futures.
Key Indicators
Dollar Index: 102.14 (-0.17%)
International Crude Oil: $102.78 (+2.88%)
Volatility Index (VIX): 16.91 (-3.48%)
U.S. 10-Year Treasury Yield: 5.01%
MSCI Korea Index: +5.37%
Overnight Futures: +0.56%
Source: Market Analyst's Stock Story (t.me/shmstory)
YouTube: Market Analyst TV www.youtube.com/@blueoak1004
This article has been reorganized from a Telegram post by "Market Analyst's Stock Story" with the author's consent. All content may contain errors and does not constitute a recommendation to buy or sell securities, and therefore cannot be used as the basis for trading decisions. Under no circumstances can the contents of this post be used as legal evidence.
