Overnight US stocks | Fed Holds Rates Steady, All Three Major Indexes Close Higher; SK Hynix (SKHY.US) Surges Over 13%

Wednesday, the three major indexes closed higher as the Fed held rates steady. Governors Cook and Cleveland Fed President Hammack dissented, advocating for a 25 basis point rate hike. Fed Chair Warsh said the central bank will reduce the number of meetings at which members vote on interest rates. [US Stocks] At the close, the Dow Jones Industrial Average rose 97.53 points, or 0.19%, to 52,475.10; the S&P 500 rose 21.38 points, or 0.28%, to 7,743.98; the Nasdaq Composite rose 72.04 points, or 0.27%, to 26,549.85. SK Hynix (SKHY.US) rose over 13%, Micron Technology, Inc. (MU.US) rose nearly 6%, and Oracle Corporation (ORCL.US) rose 10.5%. [European Stocks] Major European indexes closed collectively higher, with the UK's FTSE 100 up 0.07%, France's CAC40 up 0.04%, Germany's DAX30 up 0.42%, and Italy's FTSE MIB up 0.40%. [Forex] The US Dollar Index, which measures the greenback against six major currencies, fell 0.11% on the day to close at 102.211 in late New York trading. As of late New York trading, 1 euro exchanged for 1.1150 US dollars, up from 1.1135 the previous trading day; 1 pound exchanged for 1.3316 US dollars, up from 1.3313 the previous trading day. 1 US dollar exchanged for 158.05 Japanese yen, up from 157.95 the previous trading day; 1 US dollar exchanged for 0.8290 Swiss francs, up from 0.8287 the previous trading day; 1 US dollar exchanged for 1.4021 Canadian dollars, down from 1.4052 the previous trading day; 1 US dollar exchanged for 9.9139 Swedish kronor, down from 9.9489 the previous trading day. [Cryptocurrencies] Bitcoin rose over 1% to $80,806 as of press time; Ethereum rose over 1.6% to $2,347. [Precious Metals] Spot gold stood at the $4,068.67 mark; spot silver at $53.995/oz. [Crude Oil] December-delivery WTI crude futures rose 2.9% to settle at $102.78 per barrel; December-delivery Brent crude futures rose 1.3% to settle at $115.32 per barrel. [Macro News] Fed Holds Rates Steady, but Two Officials Favor Another Hike. The Fed decided at this meeting to keep rates unchanged, after the central bank had just raised rates last month. The move buys the Fed more time to judge whether further hikes are needed to prevent rising energy costs and the AI construction boom from spilling over into broader inflation. The decision keeps the Fed's benchmark rate in the 3.75%-4% range and was approved by a 10-2 vote. Fed Governor Cook and Cleveland Fed President Hammack dissented, advocating for a 25 basis point rate hike. In the policy statement, the rate-setting committee did not significantly change Wall Street's expectation that the Fed may hike again at its next meeting in December. The statement said: "As more information accumulates, the Committee will be able to assess the appropriate policy stance to ensure inflation returns promptly to the Committee's 2% objective." Media: Vance Writes to Iranian Official Rezaei in Bid to Restart Peace Talks. According to media reports, US officials and people familiar with the matter said US Vice President Vance is in contact with Rezaei, secretary of Iran's Supreme National Security Council, in an attempt to restart peace negotiations. Vance has written to Rezaei under Trump's direction and is probing whether the two sides can find enough common ground to persuade Trump not to order a short, sharp round of strikes on Iran in the coming weeks. Some US officials believe engaging with Iranian hardliners may yield better diplomatic results. Vance's letter and subsequent discussions between US and Iranian officials did not involve the specifics of a peace plan but focused on a possible negotiating framework. Rezaei said last week that Iran will not negotiate with Washington until its core demands are concretely met. A spokesperson for Vance declined to comment on the negotiations. A spokesperson for Iran's Foreign Ministry said they were unaware of Vance's outreach. "New Bond King" Gundlach to Fed: What Are You Waiting For? Time to Hike. "New Bond King" Gundlach said it is unclear why the Fed is delaying further rate hikes. "What are you waiting for? You just upgraded your economic assessment," he said, referring to Fed Chair Warsh's comments at the post-decision press conference about a strong macroeconomic environment. Gundlach said, "We are heading toward headline CPI reaching 4%. The commodity index is rising in a bull market, and I don't understand why the Fed is so reluctant to act." "I think the Fed's current policy pace is somewhat behind the curve," Gundlach said. He noted that the Fed's current policy rate of 3.75%-4% is clearly below the current two-year US Treasury yield of about 4.7%. He believes this shows the Fed needs to raise rates further from current levels. "If oil prices don't fall significantly, I think the Fed will have to hike in December," Gundlach said. [Individual Stock News] Marvell Technology, Inc. Reportedly in Advanced Talks to Acquire Lumentum. According to reports, people familiar with the matter said Marvell Technology, Inc. (MRVL.US) is in advanced talks to acquire data center optical communications equipment maker Lumentum (LITE.US). Amid the AI industry's race to scale up, the potential mega-deal could become another major M&A case in the sector. The people said the deal could be announced as early as next week. Marvell Technology, Inc. fell as much as 10% in after-hours trading, while Lumentum rose as much as 15%. Lumentum produces lasers and other optical technology equipment used to transmit Beijing Vastdata Technology at high speeds. These hardware components are an important foundation of the AI boom, helping data centers and telecom companies transmit information between servers, different facilities and other destinations. Marvell currently sources lasers from Lumentum, so a deal would help streamline its supply chain. Microsoft Corporation Azure Revenue Grows 48%, Beating Expectations; Free Cash Flow Remains Stable. Microsoft Corporation (MSFT.US) on Wednesday reported quarterly cloud revenue that beat expectations, indicating that the company's massive AI investments are starting to pay off as Wall Street grows increasingly cautious about big tech's debt-financed, ever-rising spending. In the first fiscal quarter ended September, Microsoft Corporation's Azure cloud computing business revenue grew 48% to $33.17 billion, above the market expectation of $32.84 billion. Capital expenditure for the quarter was $45.2 billion, up from $34.9 billion a year earlier. Microsoft Corporation had previously forecast first-quarter capital expenditure of $50 billion. The company reported free cash flow of $18.6 billion, versus the market's prior expectation of $8.54 billion. Among hyperscale cloud providers, Microsoft Corporation is also the only one expected to remain cash-flow positive next year. AI Investment Returns Under Pressure: Alphabet Inc. Class C Quarterly Revenue and Profit Both Miss Expectations. Alphabet Inc. Class C parent Alphabet (GOOG.US) reported quarterly revenue and profit below market expectations, indicating the company has yet to generate enough returns from its AI business to justify its massive investments. Alphabet said that in the three months ended September 30, revenue excluding payments to partners was $111.2 billion, and net profit per share was $2.12, both below Wall Street expectations. Alphabet Inc. Class C is racing to build AI infrastructure for itself and its customers, driving capital expenditure to record levels. These investments have helped Alphabet Inc. Class C rank among the top suppliers of computing power to AI companies such as Anthropic and Meta. Alphabet Inc. Class C is also developing its own AI models and integrating them into consumer-facing products such as its search engine, YouTube and Gmail. However, relative to the scale of spending, these efforts have so far not yielded commensurate returns.