First Signal

No. 002Wednesday, October 28, 2026Close edition

We give you the facts, the moves, and, of course, what we make of it all.

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The Open

Today in one paragraph

The Fed held its benchmark rate at 3.75% to 4%, and two of its twelve voters wanted a hike instead. Oracle jumped 10.7% after promising $225 billion in revenue by 2030 and a cap on new borrowing. Nelson Peltz's Trian and partners offered $7.35 a share to take Wendy's private, and the burger chain rose 15.1%. A second buyout bid, for the components maker LCI Industries, made it a busy day for deal hunters. U.S. crude settled 2.9% higher at $102.78 on a report that Washington told Gulf allies to prepare for strikes on Iran after the midterms. The S&P 500 rose 0.3%. After the bell, Alphabet fell about 9% on negative free cash flow and Microsoft rose about 2%. Our read: the market has started grading the AI giants on cash, not just growth. The one that burned cash got sold, and the one that promised to stop borrowing got bought.

Inside Oracle's $225 billion promise · The Fed's U-turn, in one chart · Our odds for December

Chart of the day

The Fed's rate ceiling, since 2022

The top of the Fed's target range, daily. The Fed raised it to 5.50% by 2023, cut it to 3.75% between September 2024 and December 2025, then turned around in September with a hike to 4.00%. On Wednesday it held there, and two officials voted for another hike. Source: FRED (Federal Funds Target Range - Upper Limit).

What Happened Today?

The most important stories, through our eyes

Oracle puts a ceiling on its borrowing

The database giant promises $225 billion in revenue by 2030, caps new fundraising at $20 billion, and jumps 10.7%.

Oracle ORCL $144.54 +10.7%

What the market heard: Oracle took its name from a 1977 CIA project, code-named Oracle, that was the young company's first customer. Larry Ellison, Bob Miner and Ed Oates built it into a giant of database software. Last year it jumped into the AI infrastructure business, renting computing capacity to OpenAI and others, and the bill has been enormous. Its capital spending more than doubled to $55.7 billion in fiscal 2026 and is expected to reach $91.9 billion this fiscal year, according to FactSet data cited by CNBC. It has issued $117 billion of long-term debt, and S&P rates it BBB-, the lowest rung of investment grade. Before Wednesday the stock had lost about a third of its value this year.

At its investor day, Oracle laid out targets through fiscal 2030: revenue of $225 billion or more, growth of "more than 35% CAGR" from fiscal 2026, an operating margin above 40% and earnings of more than $21 a share. It expects free cash flow to turn positive in the second half of fiscal 2028 and to reach at least $30 billion in fiscal 2029. Then came the financing: Oracle will limit new money raised in the capital markets from fiscal 2027 through 2030 to $20 billion, about half stock and half debt, not counting refinancing. That comes on top of $20 billion of stock it already sold this fiscal year. Analysts had already expected about $224.2 billion of fiscal 2030 revenue. The stock rose 10.7% to $144.54, its best day since May, on nearly three times its usual volume. It is still about half what it was a year ago.
What it might mean: The revenue number wasn't news; Wall Street had it penciled in. The news was a lid on the borrowing. Oracle's problem was never demand. It was that nobody could see where the spending stopped, and a company rated one notch above junk can't borrow forever. A hard $20 billion cap turns an open-ended bet into a plan with an end date. Our call: the stock holds above Tuesday's $130.53 close through its December results, as long as the plan's numbers survive first contact with the next quarter.
What would kill it: Oracle selling new bonds or stock beyond the plan before December, or the cost of insuring its debt climbing back above its October peak of about 3.2 percentage points a year.

Oracle, the past year

Peltz bids to take Wendy's private

Trian and partners offer $7.35 a share in cash for the burger chain they already own 16% of, and Wendy's jumps 15.1%.

Wendy's WEN $7.07 +15.1%

What the market heard: Dave Thomas opened the first Wendy's in Columbus, Ohio, in November 1969 and named it after his daughter Melinda Lou, whom the family called Wendy. In 2008 the chain merged with Triarc, the parent of Arby's. Nelson Peltz's history with the brand goes back more than two decades, to an activist campaign, and his Trian Fund Management and affiliates are now its largest shareholder, with 16.25%. Trian looked at buying the whole company in 2022 and walked away. The chain has had a hard two years. Same-store sales have fallen for six straight quarters as budget-conscious diners eat out less, CNBC reported, and the company has cycled through chief executives.

On Wednesday the group filed a non-binding proposal to buy the rest for $7.35 a share in cash, about $1.4 billion. The buyers are Trian, Flynn Group, one of Wendy's largest franchisees, and the investment firms BlueFive Capital and Sixth Street. The filing says the deal would need no financing condition and no new debt, though the equity financing "remains subject to negotiation," and that "no assurances can be given" of a definitive agreement. The offer is 20% above Tuesday's close. The stock rose 15.1% to $7.07, on more than six times its average volume of the past month, and still sits 3.8% below the offer. Wendy's reports its third quarter on Nov. 5.
What it might mean: A buyer that already owns 16% of the company, with a big franchisee in the group, is not a stranger kicking the tires. The 3.8% gap says the market thinks this happens, at about this price. The price is the uncomfortable part: Wendy's traded above $18 two years ago, and the bid lands near the bottom. Our call: a signed deal by early next year, with at most a small bump, because a board facing six quarters of falling sales has little to argue with.
What would kill it: Wendy's board rejecting the proposal, or the stock falling back below $6.50, which would say investors stopped believing in a deal.

Wendy's, the past year. Dashed line: the $7.35 offer

The deal math, per Wendy's share
Trian group's offer, cash	$7.35
Wendy's at Tuesday's close	$6.14 (offer 19.7% above)
Wendy's at Wednesday's close	$7.07 (3.8% below the offer)
Stake the group already owns	16.25%

LCI Industries LCII +8.6%. The Elkhart, Indiana company, through its Lippert unit, supplies engineered components to the recreation and transportation markets. It received an unsolicited, non-binding offer of $101 a share in cash from the private-equity firm Monomoy Capital Partners, even though it already agreed in June to an all-stock merger with Patrick Industries. LCI's board still recommends the Patrick deal. Patrick fell 2.8%.
Ultralife ULBI +145.4%. The Newark, New York battery maker agreed to be bought by EnerSys for $16 a share in cash through a tender offer, a deal CNBC valued at about $320 million. The stock closed at $15.61.
Nvidia NVDA −1.2%. The AI chip giant faces Justice Department questions about its nearly $13 billion purchase of Hugging Face, the platform where developers share open-source AI models, CNBC confirmed after Reuters first reported the inquiry.

Big Moves, but No Explanation

Money moves in mysterious ways.

Schrödinger SDGR +15.5%

What it is. A software and biotech company, founded in 1990, whose programs simulate how molecules behave so chemists can test drug ideas on a computer before making them in a lab. A company it co-founded, Nimbus, sold a drug candidate designed with its software to Gilead in 2016 in a deal worth up to $1.2 billion.

What we know. No filing or company release on Wednesday, and it hasn't reported results since August. Other AI-for-drug-discovery stocks rose too: Recursion 7.4%, AbCellera 6.3%, Tempus AI 6.2% and Certara 4.8%, while the biotech ETF gained 1.7%. Schrödinger is up 73% this year and 5% below its high of the past year.

Today vs. other AI drug-discovery stocks

Our guess: a basket trade. When every name in a small theme rises together, someone is buying the theme, and Schrödinger, the oldest and best-known of the group, moved the most.

ADT ADT +7.9%

What it is. Home and small-business security alarms and monitoring, in the U.S. It began in 1874 as American District Telegraph. Apollo bought it in 2016, and State Farm and Google have since bought stakes.

What we know. No filing or release on Wednesday, and its last results came in July. Its best day in two years came on more than three times its usual volume. Other security names were flat: Alarm.com rose 0.2% and Allegion 0.1%. ADT is up 21% in a month.

Today vs. other security companies

Our guess: on a day with two buyout bids, investors went looking for the next one. A cheap, cash-generating company that private equity has owned before is an obvious place to look.

The Earnings Desk

Results, briefly

Vertiv VRT +16.5%, its best day since February. Vertiv makes the power and cooling gear that keeps data centers running, and AI is filling its order book: sales rose 61% to $4.31 billion, 55% without acquisitions, and chief executive Giordano Albertazzi cited "more than 100% organic orders growth." Adjusted earnings rose 78% to $2.21 a share, and it raised its 2026 sales forecast by $650 million. Whatever Alphabet's cash flow says about AI's payoff, the people selling it the plumbing are having the best year of their lives.

F5 FFIV −20.4%, its worst day in at least ten years. F5 sells the software and hardware that steer and protect traffic to big companies' apps. In its fiscal fourth quarter, revenue rose 13% to $917 million and product revenue 23%. But it expects revenue to grow just 8% to 9% in fiscal 2027, and Piper Sandler downgraded the stock, CNBC reported. Investors paid for double-digit growth and got a single-digit forecast.

The truckers had a rough day. Landstar LSTR −17.8%, its worst day in at least ten years, even though revenue rose 25.4%; its insurance and claims costs jumped to $55.3 million from $33.0 million. C.H. Robinson CHRW −11.1% grew revenue 29.5% and described "a period of significant supply-driven tightening" in trucking. Old Dominion ODFL −7.3% lifted revenue 13.1%, but its tons hauled per day were flat. Freight prices are finally rising. The reports showed who pays for it: brokers caught between shippers and scarcer trucks, and carriers whose insurance bills grow faster than their rates.

Wednesday: the trucking stocks

Reported today
Stock	Wednesday	The read
Hayward HAYW Pool pumps, heaters and filters	+13.5%	Sales rose 6% to $260.1 million and it raised its full-year earnings range to 86 to 88 cents a share. Best day since 2022.
Brinker International EAT Owner of Chili's	+12.2%	Raised its full-year forecast to $13.30 to $13.90 a share, above the $13.28 analysts expected, via CNBC.
Wingstop WING Chicken wing chain	+12.2%	Earned $1.08 a share, beating the $1.02 expected, though revenue of $185 million missed, via CNBC.
Flex FLEX Builds electronics for other companies	+11.6%	Sales rose 25% to $8.49 billion and it raised its full-year earnings range to $4.84 to $5.16 a share.
Labcorp LH Medical lab tests	+8.8%	Revenue rose 6.9% to $3.81 billion and it raised its 2026 earnings outlook to $18.30 to $18.70 a share. Best day since April 2020.
GE HealthCare GEHC Scanners and medical imaging	+6.6%	Raised its full-year earnings outlook to $4.95 to $5.05 a share, via CNBC.
Garmin GRMN GPS watches and devices	−5.8%	Revenue rose 12% to $1.99 billion, with outdoor up 20% but auto down 20%; it now sees about $8.15 billion for the year.
Baker Hughes BKR Oilfield and LNG equipment	−7.4%	Orders rose 31% to $10.8 billion, but adjusted earnings rose just 2% to 70 cents a share.
Zurn Elkay ZWS Water fixtures and drinking fountains	−11.5%	Sales rose 9% to $495.1 million. Worst day since March 2020; rival Watts Water fell 5.1%.
Diebold Nixdorf DBD ATMs and store checkouts	−12.9%	Cut its 2026 earnings outlook to $4.50 to $4.85 a share from $5.25 to $5.75, citing revenue mix and raw-material costs.
CoStar CSGP Real-estate data and Homes.com	−14.0%	Revenue rose 14% to $952 million; its new 2026 range of $3.75 billion to $3.77 billion roughly matched what analysts expected, via CNBC.
Enphase Energy ENPH Microinverters for rooftop solar	−16.0%	Revenue fell to $293.3 million from $410.4 million, and its fourth-quarter range of $225 million to $255 million came in below forecasts.

Reported Wednesday after the close (after-hours moves as of 4:55 p.m. ET)
Stock	After hours	The read
Alphabet GOOGL Google, YouTube, Gemini	about −9%	Revenue rose 25% to $127.6 billion and cloud revenue doubled to $30.7 billion, but $51.4 billion of capital spending left free cash flow at negative $9.1 billion. The Gemini app reached one billion users. Growth was never the question. The bill was.
Microsoft MSFT Windows, Azure, Copilot	about +2%	Revenue rose 19% to $92.3 billion and Azure 48%; for the first time Microsoft gave Azure in dollars, $33.2 billion. Its free cash flow stayed positive, CNBC noted.
Fortinet FTNT Network firewalls	about −26%	Revenue rose 20% to $2.08 billion and billings 29%, and it raised its 2026 revenue forecast. It had already fallen 5.9% in the session, the day F5 sank.
ServiceNow NOW Software that runs IT help desks	about −15%	Subscription revenue rose 21% to $3.99 billion, but it expects growth in contracted future revenue to slow to 18.5% from 20.5%.
Chipotle CMG Burrito chain	about +4%	Same-store sales rose 2.1%, a third straight quarterly gain, even as its restaurant margin slipped to 23.3% from 24.5%.

The week ahead

Who reports, what to watch, and how the stock took its last report

ThuOct 29

PCE inflation and GDP8:30 a.m. ET. The Fed's preferred inflation gauge for September, plus the first read on third-quarter growth (BEA)

Before the bell

Eli Lilly LLY

Zepbound and Mounjaro

How big is the weight-loss boom now?

Last report +4.9%Past month +8.8%

Before the bell

Mastercard MA

The other card network

A second read on spending

Last report +2.5%Past month +8.5%

Before the bell

Caterpillar CAT

Bulldozers, engines, generators

Data-center power vs. a building slowdown

Last report +5.6%Past month −13.5%

After the bell

Amazon AMZN

Shopping and the AWS cloud

Can AWS growth pay for the spending?

Last report +15.3%Past month +3.2%

After the bell

Intel INTC

PC and server chips

Is the turnaround working?

Last report −7.9%Past month −17.6%

After the bell

Starbucks SBUX

Coffee shops

Are the lines coming back?

Last report +1.6%Past month +8.1%

FriOct 30

Before the bell

Exxon Mobil XOM

Oil and gas

What $100 oil adds to profits

Last report −1.0%Past month +12.8%

Before the bell

Chevron CVX

Oil and gas

Same question, second oil major

Last report +2.4%Past month +12.1%

Before the bell

AbbVie ABBV

Skyrizi, Rinvoq, Botox

Life after Humira

Last report −2.5%Past month +9.3%

MonNov 2

ISM manufacturing10 a.m. ET. The first read on October's factories (ISM)

After the bell

Apple AAPL

iPhone, Mac, services

How strong is the new iPhone cycle?

Last report −7.4%Past month +4.4%

After the bell

Vertex VRTX

Cystic fibrosis medicines

Does guidance change after the Crinetics deal?

Last report +1.7%Past month +0.6%

TueNov 3

Job openings10 a.m. ET. September's JOLTS report (BLS)

After the bell

AMD

Chips for PCs, servers and AI

How fast is AI chip revenue growing?

Last report −7.0%Past month −4.8%

After the bell

Arista Networks ANET

Networking for AI data centers

Can it beat its $3.3 billion forecast?

Last report +3.6%Past month −8.0%

WedNov 4

ISM services10 a.m. ET. October's read on the service economy (ISM)

After the bell

Qualcomm QCOM

Chips for phones, cars and PCs

Is AI reaching phones yet?

Last report −2.6%Past month −0.6%

"Last report" is the stock's move the session after its previous results. Tuesday is also Election Day: the midterms.

Connecting the Dots

Where we are, and where the puck goes next

The AI boom just got a cash test, and the Fed is grading it.

For two years the market paid the AI giants for spending. On Wednesday it started asking what the spending costs, and the answer depends on the price of money.

Look at who won and who lost. Oracle, one of the most indebted of the AI builders, rose 10.7% for promising to stop borrowing so much. Alphabet grew revenue 25% and doubled its cloud business, and still fell about 9% after hours because it spent more cash than it made. Microsoft, the one giant whose cash flow stayed positive, rose. Meta said last week its own free cash flow turned negative, CNBC noted. The market's new rule: grow as fast as you like, but pay for it yourself. Meanwhile the gear sellers keep reporting gains: Vertiv's orders more than doubled.

Why does cash suddenly matter? Because money isn't getting cheaper. The Fed held its rate at 3.75% to 4%, two officials voted to raise it, and its statement called the economy's growth "strong." Futures put the odds of a December hike at about 86%, according to CME FedWatch data cited by CNBC. The 10-year Treasury yield closed at 5.01%, up from about 4.0% a year ago. Oil rose again on a report that the U.S. is preparing for strikes on Iran after the midterms, which keeps inflation, above the Fed's 2% goal for more than five years, from cooling. A company that needs to borrow $50 billion a quarter at 5% is a different investment from one that borrows at 3%. The Fed didn't move on Wednesday, but it told the AI spenders their financing bill isn't going down.

By the usual gauges, the market is calm. The S&P 500 is within 1% of its high and the VIX fell to 16.91. But chip stocks are 15% below their peak after rising more than half in a year, and the communication services sector, home of Alphabet and Meta, is down about 10% in twelve months. Our read: the AI trade is splitting in two. Owners who spend have to prove the payoff; sellers who supply keep cashing checks. Until yields fall, bet on the sellers and on the spenders that fund themselves.

Where the puck goes next: our odds through December

Neither war nor peace45%

Talks drag past the midterms, crude stays between $95 and $110, the Fed hikes on Dec. 9, and the 10-year hangs around 5%. AI chops sideways, with self-funding giants beating the borrowers. Winners: oil producers, short-term Treasuries, AI equipment makers. Losers: long bonds, homebuilders, cash-hungry AI infrastructure.

You'll know it's this one if WTI holds above $95 and futures keep the odds of a December hike above 75%.

A real deal30%

A framework agreement by mid-December. Ships move through Hormuz, WTI drops below $85, the December hike gets priced out, and the 10-year slides toward 4.6%. The borrowers rally hardest, Oracle first. Winners: chips, airlines, homebuilders, small caps. Losers: refiners first, oil producers later.

The tell: WTI settling below $90 while the 10-year closes below 4.8%.

The talks fail25%

The strikes the Gulf was told to expect arrive after Nov. 3. Brent goes above $125, the Fed hikes, and the 10-year breaks above 5.3%. Every AI company that needs outside money gets repriced. Winners: refiners, oil producers, defense, the dollar. Losers: everything priced on distant profits.

The tell: Brent closing above $120.

What would make us tear this up: Alphabet's stock recovering its after-hours loss within a week while yields keep rising. That would mean investors still pay for AI growth at any price, and cash discipline isn't the new rule after all. We'll keep score at the end of December.

Tomorrow The Fed's favorite inflation gauge, September's PCE price index, lands at 8:30 a.m. Eastern with the first estimate of third-quarter growth. After the bell, Amazon gets its turn at the cash test.