The tech-heavy Nasdaq has lost ground overnight, as cloud firm Oracle’s financial update sent investors away from many artificial intelligence-related stocks.<\/p>\n
Meanwhile, the Dow hit a record high as investors rotated into value stocks after a Federal Reserve policy update that was less hawkish than expected.<\/p>\n
Oracle shares sank about 11% after its quarterly forecasts fell short of analysts’ estimates and it warned that annual spending would run $US15 billion ($22.5b) higher than previously planned.<\/p>\n
This stoked fears that its big push to court AI cloud customers was burning cash faster than generating profit.<\/p>\n
The cost of insuring Oracle debt against default surged, with the company’s shares the biggest loser on the S&P 500, and on track for their biggest quarterly loss since mid-2001.<\/p>\n
Investors fear that Oracle’s heavy reliance on debt financing could fuel an AI bubble similar to the dotcom bust of the early 2000s.<\/p>\n
While Oracle helped drag other technology names lower, the Dow rallied along with the Russell 2000 small-cap index.<\/p>\n
“The name of the game is market rotation. We’re seeing small caps, the Dow and cyclicals all start to do better in anticipation of a reacceleration of global growth,” Matthew Miskin, co-chief investment strategist at Manulife John Hancock Investments, told Reuters.<\/p>\n
Investors also continued to digest the US central bank’s update from earlier in the week, when the Fed lowered borrowing costs by 25 basis points and chair Jerome Powell signalled a pause on further easing.<\/p>\n
However, investors were relieved that the Fed still had two rate cuts on its dot plot as it balanced still-elevated inflation with signs of labor market weakness.<\/p>\n
“The perception of further Fed easing is rippling across the market. The dollar is lower and the Treasury yield is lower and that’s triggering a risk-on impulse across stocks,” said Miskin.<\/p>\n
\u00a0“The expectation was that the Fed would be more hawkish.”<\/p>\n
Traders see at least 50 basis points of monetary easing next year on expectations that US President Donald Trump’s appointee as Fed chair is likely to be a policy dove. White House economic adviser Kevin Hassett is the frontrunner for the job.<\/p>\n
Reporting with Reuters<\/p>\n","protected":false},"excerpt":{"rendered":"The tech-heavy Nasdaq has lost ground overnight, as cloud firm Oracle’s financial update sent investors away from many…\n","protected":false},"author":2,"featured_media":341660,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[256,254,255,2001,64,63,166,2009,2005,160,2010,2006,2002,105,1491],"class_list":{"0":"post-341659","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-asx","12":"tag-au","13":"tag-australia","14":"tag-australian-dollar","15":"tag-bitcoin","16":"tag-dow-jones","17":"tag-live-blog","18":"tag-live-update","19":"tag-nyse","20":"tag-share-market","21":"tag-technology","22":"tag-wall-street"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/341659","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=341659"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/341659\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/341660"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=341659"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=341659"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=341659"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}