Oracle's Q2 revenue falls shy of estimates, Apollo CEO Marc Rowan weighs in on Fed rate cut

Market Trends & Dynamics - The Dow Jones Industrial Average closed up approximately 500 points, representing a 1% increase [2] - The NASDAQ Composite experienced a rise of three-tenths of a percent, recovering from earlier losses [2] - The S&P 500 is just slightly below its all-time high from October [2] - Optimism is prevalent in the market, with potential for the S&P 500 to reach 8,000 points if the Federal Reserve continues easing [11] - Interactive Brokers anticipates a Santa Claus rally, potentially pushing the S&P 500 past the 7,000 milestone [12] Interest Rates & Monetary Policy - The 10-year Treasury note is at 416%, up by approximately two basis points, and the 30-year Treasury note is at 488% [3] - The Federal Reserve's decision to cut interest rates by a quarter point led to rhetoric suggesting a cautious approach [6][7] - The market has already priced in expectations of another rate cut [44] - Apollo internally believes there is no need for a rate cut based on current data [41] Company Performance & Earnings (Oracle & Adobe) - Oracle's Q2 adjusted EPS beat expectations at $226 versus a consensus of $164, but revenue was slightly below estimates at $1606 billion versus $1621 billion [13] - Oracle's Q2 cloud revenue was $8 billion, slightly below the street estimate of $804 billion, while cloud infrastructure revenue was $41 billion, exceeding the estimate of $409 billion [14] - Oracle's remaining performance obligations (RPOs) grew sequentially by $68 billion to $523 billion, indicating new commitments from Meta, Nvidia, and others [19] - Adobe's Q4 adjusted EPS was $550, surpassing the street estimate of $539, and revenue reached $619 billion, exceeding the estimate of $611 billion [36] AI & Data Centers - Oracle executives had previously convinced the street they were an AI winner, but concerns arose regarding customer concentration risk with OpenAI and debt risk related to data center buildout [16] - The demand for data centers is strong, but the return on equity is a function of renewal, with uncertainty surrounding energy usage and technology [56][57] - Concerns exist regarding the debt levels of some tech companies funding their AI ambitions, particularly for intermediaries who are large owners of data capacity [60][61] Private Markets & Credit - Much of the financial press focuses on levered lending when discussing private credit, but most private credit is investment grade [48] - Investors are using levered lending to reduce risk, moving money out of equity or high-yield bonds [51] - Defaults in well-underwritten credit usually have strong recoveries and are not necessarily a sign of something wrong in the economy [54]