Most U.S. Equities are advancing on Thursday, though a decline for Oracle is impeding Wall Street's progress as shareholders ponder if its substantial investment in artificial-intelligence advancements will yield positive results.
TL;DR
- Most U.S. Equities advanced, but Oracle's decline impacted Wall Street's progress.
- Oracle's substantial AI investment raises shareholder concerns about future profitability and productivity.
- Nvidia, a key AI firm, also experienced a decline, impacting the S&P 500.
- Treasury yields dropped, potentially shifting investor capital towards equities and alternative assets.
The S&P 500 declined by 0.4% during the initial trading session, moving somewhat further away from its record peak established in October. The Dow Jones Industrial Average saw a gain of 233 points, representing a 0.5% increase, by 9:35 a.m. Eastern time, while the Nasdaq composite registered a 0.7% decrease.
Oracle was one of the heaviest weights on the market and sank 14.5% even though it reported a better profit for the latest quarter than analysts expected. Its 14% growth in revenue came up just short of expectations.
Uncertainty also persists regarding whether Oracle's substantial investments in AI technology will ultimately yield the anticipated boost in profits and productivity that its advocates are touting. Observers expressed astonishment at the potential expenditure Oracle might allocate to AI initiatives during the current fiscal year, and ongoing inquiries persist concerning the company's funding strategy for these endeavors.
These uncertainties are impacting the AI industry generally, despite substantial financial inflows persisting. They contributed to significant and unsettling fluctuations in the overall U.S. Stock market during the previous month.
Nvidia, the semiconductor firm that has emerged as the prime example of the AI surge and is earning nearly $20 billion monthly, experienced a decline of 2.8% on Thursday. This stock was the most significant drag on the S&P 500.
Oracle Chairman Larry Ellison stated that the company will persist in acquiring chips from Nvidia, though it's now adopting a strategy of “chip neutrality,” wherein it will employ “whatever chips our customers want to buy. There are going to be a lot of changes in AI technology over the next few years and we must remain agile in response to those changes.”
Despite that, most U.S. Equities advanced, partly due to declining Treasury yields in the debt market. The return on the 10-year Treasury dropped to 4.10% compared to 4.13% yesterday and 4.18% the day before.
With Treasury yields decreasing, U.S. Government debt instruments offer reduced interest payments, potentially prompting investors to allocate more capital towards equities and alternative asset classes.
Returns declined following a report indicating that the count of U.S. Workers applying for unemployment benefits jumped during the previous week surpassed economists' projections. This could suggest an increase in job terminations.
The previous day, yields declined after the Federal Reserve cut its main interest rate for the third occasion this year, suggesting a further reduction might be forthcoming in 2026. Wall Street favors reduced interest rates as they can stimulate the economy and elevate the value of investments, despite the possibility of exacerbating inflation.
The Walt Disney Co. Was among the market’s strongest gainers. It climbed 2.1% after OpenAI announced a three-year agreement that will allow it to use more than 200 Disney, Marvel, Pixar and Star Wars characters to generate short, user-prompted social videos. Disney is also investing $1 billion in OpenAI.
Elsewhere on Wall Street, Oxford Industries tumbled 15.1% after the company behind Tommy Bahama and Lilly Pulitzer said its customers have been seeking out deals and are “highly value-driven.” CEO Tom Chubb said the start of the holiday shopping season has been weaker than the company expected, and it cut its forecast for revenue over the full year.
Vera Bradley, meanwhile, fell 26% after reporting a larger loss than expected.
In stock markets abroad, indexes ticked higher in Europe after falling in much of Asia.
Japan’s Nikkei 225 index sank 0.9%, hurt by a sharp drop for SoftBank Group Corp., which is a major investor in AI.
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AP Writers Teresa Cerojano and Matt Ott contributed.
