Stocks Fall as Oracle Rekindles AI Fears After Fed: Markets Wrap

(Bloomberg) — The equity rally spurred by a US interest-rate cut and Federal Reserve Chair Jerome Powell’s sanguine outlook unraveled after Oracle Corp. reignited concerns about the vast spending tied to artificial intelligence.

Futures on the S&P 500 fell after Wednesday’s advance left the benchmark just shy of a record. Nasdaq 100 contracts dropped 0.8%. Oracle, viewed as a bellwether of the AI investment boom, sank more than 10% in premarket trading after cloud sales missed estimates and the company raised its 2026 capital spending outlook by $15 billion to $50 billion.

The losses spilled into other AI heavyweights, with Nvidia Corp. leading declines among the Magnificent Seven with a 1.7% drop. Risk appetite weakened more broadly, sending Bitcoin down nearly 2% as it approached $90,000. The dollar was little changed.

Oracle’s results pushed worries about tech valuations and whether the capital outlays on AI infrastructure will pay off back to the forefront, reviving cocnerns that fueled weeks of volatility in November. While the sector has powered the S&P 500’s stunning rally this year, those 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.”

Markets will get another read on the strength of the AI trade when Broadcom Inc. reports after the close. The stock has surged more than 180% from its April low, and Bloomberg Intelligence expects results that come in line or slightly above estimates as hyperscale customers continue to ramp up spending.

Prior to the tech-led slide, investors had taken comfort in Fed policymakers leaving the door open to more easing next year, even though Wednesday’s 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.

US Treasuries rallied after the cut was paired with the authorization of fresh bill purchases to rebuild bank reserves. The 10-year rate, which dropped around four basis points in the previous session, was little changed at 4.14% on Thursday. The declines stalled a run-up in yields that had driven one global gauge to its highest since 2009.

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.”

Corporate News

Oracle Corp. shares fell more than 10% in premarket 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. 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 Stoxx Europe 600 was little changed as of 9:45 a.m. London time S&P 500 futures fell 0.6% Nasdaq 100 futures fell 0.8% Futures on the Dow Jones Industrial Average fell 0.3% The MSCI Asia Pacific Index fell 0.6% The MSCI Emerging Markets Index fell 0.5% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1699 The Japanese yen was little changed at 155.88 per dollar The offshore yuan was little changed at 7.0550 per dollar The British pound fell 0.2% to $1.3359 Cryptocurrencies

Bitcoin fell 2.2% to $90,351.42 Ether fell 4.2% to $3,201.67 Bonds

The yield on 10-year Treasuries was little changed at 4.14% Germany’s 10-year yield was little changed at 2.86% Britain’s 10-year yield declined one basis point to 4.49% Commodities

Brent crude fell 1.3% to $61.38 a barrel Spot gold fell 0.2% to $4,218.35 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Shikhar Balwani and Neil Campling.

©2025 Bloomberg L.P.