JJ Kinahan is Senior Vice President, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- Indices stay mostly flat during and after Fed announcement
- Market also shows little reaction to rising crude oil prices
- DoorDash and Instacart reportedly announcing a merger on Thursday
The market barely budged after the Federal Reserve said it would keep interest rates unchanged, exactly what traders expected.
All three major market indices were relatively flat before and after the decision to keep interest rates steady at 3.75% to 4.0% was announced. By the close, the Dow Jones Industrial Average added 0.19%, the Nasdaq Composite rose 0.28% and the S&P 500 Index finished 0.27% higher.
The muted response could be read as bullish because there’s little sense of FOMO (fear of missing out) among market participants, which tends to keep the market higher. The S&P 500 has had a rocky month, but it’s still trading within 1.2% of its all-time high on October 6. It might also be considered a home run for the Fed, which doesn’t want to spook the market.
Two Fed members voted to increase the rate by 25 basis points, representing very little dissension among the entire Federal Open Market Committee (FOMC). The CME FedWatch tool leaned further into a 25-basis point hike in December, with an 82.6% probability, up from 78.3% on Tuesday.
Beyond the indifference to the Federal Reserve’s decision, the market also seemed mostly unfazed today by the rise in crude oil prices. WTI Crude Oil rose 2.51% to $102.44 a barrel as conflicts and rhetoric in the Middle East escalated.
Oracle shares were higher by 10.7% after the database systems maker set out ambitious sales and earnings plans during its Investor Day. Oracle projected revenues would hit at least $225 billion in fiscal year 2030, implying a compound annual growth rate of 35%.
What also caught investors’ attention was Oracle’s pledge to limit capital-market funding to $20 billion through 2030, probably alleviating some fears of artificial intelligence (AI) investment overspending. The guidance might also give investors a sense of relief that Oracle’s backlog might produce enough funds for future growth.
Wendy’s shares climbed nearly 15% after Nelson Peltz’s Trian Management and partners offered about $1.4 billion to take the fast-food chain private, according to the Wall Street Journal. At $7.35 a share, today’s bid represents a 20% premium. We normally don’t talk about stocks under $10, but who doesn’t love a Frosty?
“Wendy’s sits at a critical juncture” given the economic and competitive challenges the burger chain faces, according to a letter attached to the Securities and Exchange Commission filing.
“Private ownership is a better path and provides the patient, long-duration capital needed to restore the business and the franchise system to a position of strength.”
Options activity for Wendy’s is brisk, with six times the normal number of calls at the seven and 10 times the normal puts at the six.
In other options activity, DoorDash is seeing six times its normal calls expiring Friday at the 185 and December’s 175 calls. CNBC reported that DoorDash and Instacart are expected to announce a reported $17 billion deal to merge.
After the bell, Ford shares fell 2.6% as the carmaker missed Wall Street’s earnings expectations. Microsoft shares moved nearly 4% to the upside after beating estimates. Alphabet managed to turn in revenues that were 25% higher than the year-ago period, but reported a deep drop in cash flow. Shares dropped by 9.4%.
Happy Trading!
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