Nasdaq slips to one-week low as Oracle AI shock overshadows Fed relief

NEW YORK: Wall Street’s tech-heavy Nasdaq slid to a one-week low on Thursday, as renewed jitters over Oracle’s aggressive AI spending spree drowned out optimism sparked by a softer, less hawkish Federal Reserve.

Oracle plunged 14.4 percent after its quarterly forecasts fell short of analysts’ estimates and it warned annual spending would run USD15 billion higher than previously planned, stoking fears that its big push to court AI cloud customers is burning cash faster than it’s generating profits.

The cost of insuring against the cloud company defaulting surged, with shares on track for their biggest quarterly loss since mid-2002. Investors fear that Oracle’s heavy reliance on debt financing could fuel an AI bubble similar to the dotcom bust of the early 2000s.

Technology stocks led the S&P 500 lower with a 1.6 percent drop, while the Philadelphia Semiconductor Index fell 2.6 percent, as heavyweight Nvidia slid 3.7 percent. Broadcom lost 3.9 percent ahead of its earnings report after the closing bell.

Other AI infrastructure companies such as CoreWeave fell 5.3 percent, Applied Digital and Nebius lost 3.7 percent and 2.2 percent, respectively.

At 11:34 a.m. ET, the Dow Jones Industrial Average rose 480.21 points, or 1.00 percent, to 48,537.96, the S&P 500 lost 23.85 points, or 0.34 percent, to 6,862.83 and the Nasdaq Composite lost 248.77 points, or 1.05 percent, to 23,405.39.

The blue-chip Dow hit a record high, buoyed by financials and other sectors, with money rotating out of growth names and into value plays.

The S&P 500 growth index slipped nearly 1 percent. The iShares S&P 500 Value ETF edged up 0.3 percent, and has outperformed its growth peers this quarter.

Rate-sensitive small caps outperformed, lifting the Russell 2000 0.6 percent, while the equal-weighted blue-chip Dow rose 1 percent.

The Federal Reserve lowered borrowing costs by 25 basis points as expected on Wednesday, but Chair Jerome Powell signaled a pause on further easing. Still, investors were relieved that rate hikes were not on the horizon, at a time when markets expect higher interest rates in other developed economies by the end of 2026. Traders see at least 50 bps of monetary easing next year on expectations that US President Donald Trump’s appointee to the Fed Chair will likely be a policy dove. White House economic adviser Kevin Hassett is the front-runner for the job.