By Alex Eule
Banks Beat AI. For the second day in a row, a high-profile tech stock crushed investors' AI dreams. Oracle's big spending was the problem Thursday. Today, traders dumped shares of Broadcom after the chip maker failed to meet high expectations. The stock fell 11%. Oracle stock continued to fall, as well, finishing Friday down 4.5%. The broader IT sector was down 2.9% on the day.
Not that long ago Oracle was seen as the best way for public-market investors to play red-hot start-up and ChatGPT maker OpenAI, which has committed to buy $300 billion in cloud services from Oracle.
But now that guarantee is an albatross, with AI skeptics worried OpenAI won't be able to pay. Sure enough, the cost of credit default swaps on Oracle debt, essentially insurance against a potential default, have risen to their highest level since the 2008 financial crisis.
The two earnings disappointments led to a bad week for tech. The Nasdaq Composite finished the week down 1.6% after Friday's 1.1% slide.
And yet, in a reversal of 2025 trends, much of the rest of the market is doing just fine. The blue-chip Dow Jones Industrial Average gained 503 points, or 1%, on the week. Its top three contributors were financial services names Goldman Sachs, Visa, and American Express. The recent strength -- boosted by the Fed's rate cut and a promise of relaxed regulations from the Trump administration -- sent Bank of America to its first record close since 2006, banking's halcyon days before the bursting of the housing bubble.
The run could continue, says Adam Turnquist, chief technical strategist for LPL Financial. He writes: "Looking ahead, factors such as reduced regulation, lower capital requirements, an improving environment for dealmaking, and a favorable macroeconomic backdrop for trading may provide further tailwinds for banks in the coming year."
The AI trade may be in the doldrums, but banks are suddenly picking up the slack.
The Hot Stock: Lululemon Athletica +9.6% The Biggest Loser: Sandisk -14.7%
Best Sector: Consumer Staples +0.9% Worst Sector: Information Technology -2.9%
This Weekend's Magazine
The Calendar
Wall Street can usually take it easy after the December Federal Reserve meeting, as it's usually the last big macroeconomic event for the year. Not this year. Next week, we'll get an update on both the labor market, which has been weakening, and inflation which has stubbornly stayed above the Fed's 2% target. This tension is what has left the FOMC deeply divided, with dissents in both directions at the last two monetary-policy meetings. The Bureau of Labor Statistics releases the November jobs report on Tuesday and the consumer price index on Thursday, both delayed because of the government shutdown.
On the earnings front, home builder Lennar reports results on Tuesday, General Mills and Micron Technology on Wednesday, and FedEx and Nike on Thursday.
What We're Reading Today
-- Don't Fight the AI Bubble. Even Cisco Eventually Won. -- Jamie Dimon Weighs In on Fed Chair Candidates at Closed-Door Event -- Lululemon Stock Pops on Earnings Beat and CEO Change -- This GE Spinoff Is Beating the S&P 500, Nvidia -- and Bitcoin. Here's How. -- And this weekend's cover story: Kevin Hassett Says He Would Be Independent at the Fed. Some Who Know Him Worry.
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December 12, 2025 19:55 ET (00:55 GMT)
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