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Oracle Earnings Spark Tech Sell-off, Dow Soars
13 Dec
Summary
- Nasdaq 100 fell to a one-week low due to AI spending concerns.
- Dow Jones Industrials reached a new all-time high, boosted by Visa.
- US weekly jobless claims jumped to a three-month high.
- US trade deficit shrank unexpectedly to its smallest in over five years.
The stock market experienced a bifurcated trading session, with the Nasdaq 100 index dipping to a one-week low while the Dow Jones Industrials carved out a new all-time high. Investor sentiment soured following Oracle's quarterly earnings, which fell short of expectations and highlighted significant capital expenditure for AI initiatives. This led to a notable decline in Oracle's stock price and cast a shadow over the broader technology sector.
Despite anxieties surrounding AI investments, underlying market support emerged from a weakening labor market and a shrinking trade deficit. Weekly initial unemployment claims in the US rose unexpectedly to a three-month peak, a sign that could influence future Federal Reserve policy. Concurrently, the US trade deficit for September contracted more than anticipated, reaching its most favorable position in over five years.
In the bond market, Treasury yields decreased, with the 10-year T-note yield falling as investors sought safer assets amidst equity market volatility. Federal Reserve commentary suggesting no further rate hikes were anticipated, coupled with the rise in jobless claims, provided a dovish signal. However, upcoming Treasury auctions may introduce some supply-side pressure on bond prices.
