Dow jumps 600 points to record as Oracle sparks rush out of AI trade into broader market: Live updates

The Dow Jones Industrial Average reached new heights on Thursday as a Federal Reserve interest rate cut followed by disappointing Oracle results prompted investors to move out of high-flying tech stocks and into names that can benefit from a growing U.S. economy.

The 30-stock Dow rose 663 points, or 1.4%, and hit a new record high, supported by a rise in Visa shares after the name was upgraded at Bank of America. The broad market S&P 500 traded up 0.1%, while the Nasdaq Composite pulled back 0.4%.

Oracle shares tumbled 11% 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 artificial intelligence investments, spurring a rotation trade. Other AI plays were trading lower, including Nvidia and Broadcom, which were each down 1%. Meanwhile, cyclical stocks like Home Depot were higher.

“The market is properly concerned with Oracle and, by extension, with the AI trade in general, because there’s literally trillions of dollars of commitments out there, but there’s clearly a difficulty in figuring out how this is going to transpire, and Oracle, to some extent, is acting like the canary in the coal mine,” said Steve Sosnick, chief strategist at Interactive Brokers. “The market’s right to rotate a little bit away from this.”

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. That places its key overnight borrowing rate at a 3.5%-3.75% range. The central bank also ruled out a rate hike in the path ahead.

With smaller companies tending to benefit more from lower rates than larger companies because their borrowing costs are more closely linked to market rates, the Russell 2000 index of small-capitalization stocks hit a new intraday high Thursday alongside the Dow. The Russell 2000 had joined the three major indexes in seeing a boost during Wednesday’s session after the Fed’s rate cut and even notched a record close.

At this point, Sosnick said the so-called Santa Claus rally “seems preordained” and could propel the S&P 500 to break the 7,000 level. However, he expects some pressure on the broader market next year, with a 2026 year-end S&P 500 price target of 6,500. He cited AI headwinds as well as a new Fed chair and the midterm elections as catalysts for downside.

“Ultimately, I do have to be a bit concerned, because if the steam is coming out of the AI trade, there’s a lot of heavy lifting that has to be done by everything else,” the chief strategist told CNBC. “After three years of a huge bull market, there are, I think, some underappreciated risk elements.”