U.S. stocks closed higher amid volatile trading after Oracle's (ORCL.US) latest earnings report reignited concerns about whether tech companies can profit from their AI investments, prompting bargain hunters to step in. The S&P 500 rose 0.2%, reversing early losses to post a record close for the first time since late October. The Nasdaq 100 fell 0.4%, while the Bloomberg Magnificent Seven Index dropped 0.6%. Oracle shares plunged 11% after disclosing $12 billion in capital expenditures for its latest quarter—a surge from $8.5 billion in the prior period—raising doubts about data center spending sustainability.
Chris Zacarelli, CIO of Northlight Asset Management, noted: "While Oracle dragged down the Nasdaq and tech sector, cyclical stocks like financials, industrials, and materials outperformed as markets digested Fed Chair Powell’s dovish remarks. This broad rally lifted the Dow." The S&P 500 Equal Weight Index gained 0.8%, and the blue-chip Dow Jones Industrial Average surged 1.3%, marking its best single-day outperformance against the S&P 500 since January.
Oracle and peers have faced scrutiny over massive AI-related capital expenditures, with Wall Street skeptical about the costs and timelines for data center expansion. Among the Magnificent Seven, NVIDIA (NVDA.US) slid over 1%, while Alphabet (GOOGL.US) dropped 2.4%.
Thursday’s moves followed the Fed’s third consecutive rate cut at its final 2025 meeting, with Chair Powell praising U.S. economic resilience. Traders also assessed mixed data: U.S. jobless claims saw their largest weekly rise since the pandemic, while September’s trade deficit unexpectedly narrowed to a mid-2020 low on surging exports.
After hours, Broadcom (AVGO.US) issued strong revenue guidance, signaling AI data center demand is fueling growth. Meanwhile, skepticism around Netflix’s (NFLX.US) rumored bid for Warner Bros. Discovery (WBD.US) erased $40 billion from its market cap in six sessions—prompting retail traders to buy the dip. Netflix ranked as the third-most-active stock on Interactive Brokers’ platform this week.
Other headlines: - OpenAI and investor Microsoft were sued over a Connecticut murder-suicide, the latest case blaming ChatGPT for harmful psychological influence. - Coca-Cola CEO James Quincey will step down, with COO Henrique Braun succeeding him in March. - Lululemon (LULU.US) announced CEO Calvin McDonald’s departure and initiated a search for his replacement. - Eli Lilly (LLY.US) rose 1.6% as its experimental obesity drug helped patients lose nearly 25% of body weight, potentially becoming the most effective treatment yet.
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