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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 index leaped 604.41 points, or 1.3%, to pause for lunch Thursday at 48,662.16, boosted by a rise in Visa shares after the name was upgraded at Bank of America.
The S&P 500 index backtracked 0.76 points to 6,885.92.
The NASDAQ handed over 131.35 points to 23,622.81.
Oracle shares tumbled 12% 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, Broadcom, AMD and CoreWeave, which were each down 2%. Meanwhile, cyclical stocks like Home Depot were higher.
The report added more fuel to the debate about how quickly tech companies will be able to see returns on their AI investments. Other AI plays were also trading lower in extended trading, including Nvidia, dipping 3% and AMD, which was down 4%. CoreWeave fell 6%.
Those moves 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 and ruled out a rate hike.
The central bank’s Federal Open Market Committee cut its key overnight borrowing rate by a quarter percentage point to a 3.5%-3.75% range and signaled a slower pace of rate cuts ahead.
Prices for the 10-year Treasury were up Thursday, lowering yields to 4.12% from Wednesday’s 4.15%. Treasury prices and yields move in opposite directions.
Oil prices slumped $1.12 to $57.34.
Gold prices advanced $85.40 to $4,310.10.
