(Bloomberg) — Buyers emerged for US stocks after concerns on Oracle Corp.’s plans for vast capital outlays on artificial-intelligence infrastructure drove a broad retreat from risky assets.
The S&P 500 clawed back losses to climb 0.1%, putting it back near its October peak. Blue-chip and small-cap gauges, long laggards in the tech-led equity bull run, climbed to all-time highs. The Nasdaq 100 pared a 1.6% drop, though sentiment for tech stocks remained downbeat after a disappointing earnings report for Oracle, a bellwether of the AI investment boom. Traders will get another read on the strength of the AI trade when Broadcom Inc. reports after the close.
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Caution toward AI heavyweights persisted, with Nvidia Corp. down around 1.9% amid Magnificent Seven losses. Bitcoin pared a drop after dipping below $90,000. The dollar ticked lower.
Broadcom’s stock has more than doubled from its April low, and Bloomberg Intelligence expects results that are in line with, or slightly above, estimates as hyperscaler customers continue to ramp up spending.
Oracle’s results pushed worries about tech valuations and whether heavy spending on AI infrastructure will pay off back into focus, reviving concerns that fueled weeks of volatility in November. While the sector has powered the S&P 500’s stunning rally this year, spending fears have prompted some investors to rotate into other areas as the US economic outlook remains robust.
“Markets have grown far more wary of AI-related spending, which is a sharp contrast with mid-2025 when anything hinting at higher capex sparked excitement,” said Susana Cruz, a strategist at Panmure Liberum. “Oracle has been the weakest link in all this, largely because it’s funding a big chunk of its investment with debt.”
Oracle’s earnings landed after the S&P 500 closed just shy of a record on Wednesday, lifted by a Federal Reserve interest-rate cut and Chair Jerome Powell’s sanguine economic outlook.
Investors had taken comfort in Fed policymakers leaving the door open to more easing next year, even though the quarter-point cut drew three dissents. Traders stuck to bets on two cuts in 2026, even as the Fed’s new projections signaled only one such move.
“The effect of Oracle has been greater than the Fed. This already tells us everything as we’ve been witnessing a strong concentration and one theme — AI — leading the market,” said Alberto Tocchio, a portfolio manager at Kairos Partners. “This doesn’t mean that AI is gone or it’s a bubble, but we need to focus on a wider scale.”
US Treasuries rallied after the rate cut was paired with the authorization of fresh bill purchases to rebuild bank reserves. The gains continued after initial jobless claims rose more than expected in the Dec. 6 week, but waned in late afternoon trading as the yield on the 10-year note steadied at 4.14%.
Powell suggested that the Fed had now acted sufficiently to help stabilize the labor market while leaving rates high enough to continue weighing on price pressures. Officials upgraded their median outlook for growth in 2026, to 2.3% from the 1.8% they projected in September. They also foresaw inflation declining to 2.4% next year, from the 2.6% in the previous projection.
“The Fed’s ‘hawkish-but-bullish’ cut last night reinforces this: stronger 2026 growth, faster disinflation,” said Florian Ielpo, head of macro at Lombard Odier Investment Managers. “Cuts are continuing, but they’re no longer automatic — and that’s usually a constructive backdrop for equities.”
In commodities, oil retreated tracking wider losses in risk assets. Silver extended an all-time high past $63 an ounce.
What Bloomberg Strategists say…
“Rather than signaling an imminent bust in tech shares, Oracle’s earnings disappointment is poised to further redefine the divide between AI winners and losers. The next stage of the AI cycle promises even more dispersion, as companies battle for a share of booming AI spending as well as superior efficiency and cost advantages on the provider side.”
—Tatiana Darie, Macro Strategist, Markets Live. For the full analysis, click here.
Corporate News
Walt Disney Co. agreed to invest $1 billion in OpenAI and license characters from Disney, Marvel, Pixar and Star Wars for use on the Sora generative video platform. A next-generation obesity shot from Eli Lilly & Co. helped patients lose almost a quarter of their body weight, potentially making the experimental drug the most potent weight-loss medicine yet. The stock rose in premarket trading. Oracle Corp. shares fell in early trading after the company reported a jump in spending on AI data centers and other equipment, rising outlays that are taking longer to translate into cloud revenue than investors want. OpenAI and its investor Microsoft were sued over a Connecticut murder-suicide in the latest case to blame the popular ChatGPT chatbot for dangerous psychological manipulation of users. Novo Nordisk A/S shares have fallen so much this year that it’s almost as if the frenzy around weight-loss drugs that propelled the Danish pharmaceutical company’s meteoric rise never happened. Coca-Cola Co. said Chief Executive Officer James Quincey is stepping down and will be replaced at the end of March by Henrique Braun, the company’s chief operating officer. Some of the main moves in markets:
Stocks
The S&P 500 rose 0.1% as of 3:32 p.m. New York time The Nasdaq 100 fell 0.5% The Dow Jones Industrial Average rose 1.4% The MSCI World Index rose 0.3% The Russell 2000 Index rose 1.2% Currencies
The Bloomberg Dollar Spot Index fell 0.3% The euro rose 0.4% to $1.1743 The British pound was little changed at $1.3392 The Japanese yen rose 0.3% to 155.54 per dollar Cryptocurrencies
Bitcoin fell 1.3% to $91,177.64 Ether fell 4% to $3,206.95 Bonds
The yield on 10-year Treasuries was little changed at 4.14% Germany’s 10-year yield was little changed at 2.84% Britain’s 10-year yield declined two basis points to 4.48% Commodities
West Texas Intermediate crude fell 1.2% to $57.75 a barrel Spot gold rose 1% to $4,270.69 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Neil Campling and Sagarika Jaisinghani.
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