Traders work on the floor at the New York Stock Exchange on June 18, 2025.
Brendan McDermid | Reuters
The Dow Jones Industrial Average reached new heights on Thursday as investors moved out of high-flying tech stocks following Oracle’s results even after the Federal Reserve’s latest interest rate cut gave a boost to U.S. equity markets in the prior session.
The 30-stock Dow rose 431 points, or 0.9%, and hit a new record high, boosted by a rise in Visa shares after the name was upgraded at Bank of America. The broad market S&P 500 shed 0.3%, while the Nasdaq Composite pulled back 0.9%.
Oracle shares tumbled 13% after the cloud computing company posted disappointing quarterly revenue and raised its spending forecast, heightening concerns about the company’s debt.
The report added more fuel to the debate about how quickly tech companies will be able to see returns on their AI investments, spurring a rotation out of tech stocks from investors and into those that would benefit from a lower rate environment and a growing U.S. economy. Other AI plays were trading lower, including Nvidia, Broadcom and AMD, which were each down 3%. CoreWeave fell 5%. Meanwhile, cyclical stocks like Home Depot were higher.
The downbeat sentiment toward tech put a damper on the momentum garnered during the previous session, which saw the S&P 500 close just inches away from a new record after a divided Fed announced an interest rate cut for the third time this year and ruled out a rate hike. The central bank’s Federal Open Market Committee cut its key overnight borrowing rate by a quarter percentage point to a 3.5%-3.75% range and signaled a slower pace of rate cuts ahead.
Fed Chair Jerome Powell said the central bank is “‘well positioned to wait and see how the economy evolves” and noted President Donald Trump’s tariffs have been a driver of inflation.
Along with the three major indexes finishing Wednesday’s session in the green, the Russell 2000 index of small-capitalization stocks notched a record close. Smaller companies tend to benefit more from lower rates than larger companies because their borrowing costs are more closely linked to market rates.
Although markets rallied toward the latter half of Wednesday’s session, some investors suggest being cautious ahead given that the central bank remains in a wait-and-see mode over the path of future monetary policy.
“We’re not surprised to see near term optimism in the markets given that the Fed continues to cut rates even though the economy is growing, however, we think the rose colored glasses may come off once investors realize that the path to lower interest rates may take longer — or may not materialize at all — to the extent that they believe it will,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management.
F.L. Putnam Investment Management chief market strategist Ellen Hazen said that greater uncertainty regarding future interest rates and conflicting data around the state of the U.S. economy could “lead to higher volatility and risk premia across risk markets like equities as we go into 2026.”