By Caroline Valetkevitch and Marc Jones NEW YORK/LONDON, Dec 11 (Reuters) – Major stock indexes were mixed on Thursday, with technology-related shares down after cloud computing giant Oracle sounded a warning for artificial intelligence profitability, while the dollar and U.S. bond yields extended declines from the day before, when the Federal Reserve cut interest rates […]
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Stocks mixed, with Oracle adding to AI jitters; dollar, US yields decline on Fed views
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By Caroline Valetkevitch and Marc Jones
NEW YORK/LONDON, Dec 11 (Reuters) – Major stock indexes were mixed on Thursday, with technology-related shares down after cloud computing giant Oracle sounded a warning for artificial intelligence profitability, while the dollar and U.S. bond yields extended declines from the day before, when the Federal Reserve cut interest rates but gave a less hawkish outlook than expected.
The Nasdaq slipped to a one-week low early. The S&P 500 was slightly lower, while the Dow was up sharply, adding to Wednesday’s gains following the Fed rate cut. A global stock index was also higher.
Oracle reignited jitters over stratospheric tech valuations by missing analysts’ sales and profit estimates and flagging a $15 billion AI overspend. Its shares were last down 13.1% and the S&P 500 tech sector was down more than 1%. Shares of Al leader Nvidia were down 3.4%.
Broadcom shares were down 4.4%, and all eyes will be on its quarterly results, due after the closing bell.
Earlier, Japan’s Nikkei had lost almost 1% overnight too as SoftBank – a partner with Oracle on the U.S. Stargate data centre project – slumped more than 7.5%. [.T]
“We have Broadcom earnings after the close, so AI is going to remain in focus for the next 24 hours or so,” said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.
“Overall, the market is holding up fairly well considering how Oracle is trading and the fact that the AI space is weaker, but I think investors are a little bit cautious,” he said.
Investors were otherwise still focusing on the global interest rate outlook after the Fed lowered its benchmark funds rate, as expected, by 25 basis points to 3.5%-3.75% in a 9-3 split decision.
Fed Chair Jerome Powell sounded balanced at a press conference, saying he did not “think a rate hike is anyone’s base case.” That left interest rate futures with at least two rate cuts priced in for next year.
The Dow Jones Industrial Average rose 481.38 points, or 1.00%, to 48,539.65, the S&P 500 fell 18.98 points, or 0.28%, to 6,867.70 and the Nasdaq Composite fell 226.80 points, or 0.96%, to 23,427.35.
MSCI’s gauge of stocks across the globe rose 0.47 points, or 0.05%, to 1,012.21. The pan-European STOXX 600 index rose 0.7%.
The U.S. dollar slumped, hitting multi-month lows against the euro, Swiss franc, and sterling and extending losses from the previous session.
The Swiss franc drew support from the Swiss National Bank’s decision to hold interest rates steady. The dollar fell 0.7% versus the franc to 0.7946, after earlier touching its lowest level since mid-November.
The euro was last up 0.4% at $1.1737 after hitting its highest level since October 3. The dollar index, which measures the greenback against a basket of currencies, fell 0.41% to 98.18.
U.S. Treasury yields also fell for a second straight session in the wake of the Fed policy statement.
The Fed also said on Wednesday that purchases of short-dated government bonds will begin on Friday, with an initial round totalling around $40 billion in Treasury bills – a move that was earlier and larger than what investors had expected.
The yield on the benchmark U.S. 10-year Treasury note fell 4.8 basis points to 4.116% and was on track for its biggest two-day drop in two months. The yield snapped a four-session streak of gains on Wednesday, its longest run of gains in five weeks. The 2-year note yield, which typically moves in step with interest rate expectations for the Fed, fell 4.8 basis points to 3.518%.
The euro zone’s benchmark Bund yield hovered near a nine-month high as investors shifted focus to next week’s European Central Bank meeting.
Germany’s 10-year yields, the euro zone’s benchmark, were down 1.5 bps at 2.84% on Thursday. They hit 2.894% on Wednesday, their highest level since mid-March. The gap between U.S. and German yields dropped to 126.01, its lowest since June 2023.
In commodities, U.S. crude fell 1.78% to $57.42 a barrel and Brent fell to $61.16 per barrel, down 1.69% on the day. Spot gold rose 0.55% to $4,251.08 an ounce.
(Reporting by Caroline Valetkevitch in New York and Marc Jones in London; Additional reporting by Tom Westbrook in Hong Kong; Editing by Andrew Heavens and Matthew Lewis)