Stocks mostly gain while Oracle sinks; US dollar, yields decline on Fed views

Major stock indexes mostly rose on Thursday, with the ‌Dow ​and S&P 500 posting record closing highs even as ‌technology-related shares fell following disappointing forecasts from Oracle, while the dollar and U.S. bond yields declined.

The Nasdaq ended lower, while ​the Dow and S&P 500 added to gains from the day before, when the Federal Reserve cut interest rates but gave a less hawkish outlook than expected. A global stock index was ‍also higher.

Cloud computing giant Oracle reignited jitters over ​stratospheric tech valuations by missing analysts’ sales and profit estimates and flagging a $15 billion artificial intelligence overspend. Its shares were last down 10.8% and the S&P 500 tech sector ​was down as well. ⁠Shares of AI leader Nvidia were down 1.5%.

Earlier, Japan’s Nikkei lost almost 1% overnight as SoftBank - a partner with Oracle on the U.S. Stargate data centre project - slumped more than 7.5%. [.T]

“AI is going to remain in focus for the next 24 hours or so,” said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.

“Overall, the market is holding up fairly well considering how Oracle is trading and the fact that the AI space is weaker, but I think investors are a little ‌bit cautious,” he said.

Investors were otherwise still focusing on the global interest rate outlook after the Fed lowered its benchmark funds rate, as expected, by 25 ​basis ‌points to 3.5%-3.75% in a 9-3 split ‍decision.

Fed Chair Jerome Powell sounded ⁠balanced at a press conference, saying he did not “think a rate hike is anyone’s base case.” That left interest rate futures with at least two rate cuts priced in for next year.

The Dow Jones Industrial Average rose 646.26 points, or 1.34%, to 48,704.01, the S&P 500 added 14.32 points, or 0.21%, to 6,901.00 and the Nasdaq Composite fell 60.30 points, or 0.25%, to 23,593.86.

MSCI’s gauge of stocks across the globe rose 3.17 points, or 0.31%, to 1,014.91. The pan-European STOXX 600 index rose 0.55%.

The U.S. dollar slumped, hitting multi-month lows against the euro, Swiss franc, and sterling and extending losses from the previous session.

The Swiss franc drew support from the Swiss National Bank’s decision to hold interest rates steady. Against ​the Swiss franc, the dollar weakened 0.63% to 0.795, after earlier touching its lowest level since mid-November.

The euro was last up 0.43% at $1.1744 and hit its highest level since October 3. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.27% to 98.32.

U.S. Treasury yields also fell for a second straight session following the Fed policy statement.

The Fed also said on Wednesday that purchases of short-dated government bonds will begin on Friday, with an initial round totalling around $40 billion in Treasury bills - a move that was earlier and larger than what investors had expected.

The yield on benchmark U.S. 10-year notes fell 2.7 basis points to 4.137%, from 4.164% late on Wednesday. The yield snapped a four-session streak of gains on Wednesday, its longest run of gains in five weeks. The 2-year note yield, which typically moves in step with interest rate expectations for the Fed, fell 3.9 basis points to 3.526%.

The euro zone’s benchmark Bund yield hovered near a nine-month high as investors shifted focus ​to next week’s European Central Bank meeting.

Germany’s 10-year yields, the euro zone’s benchmark, were down 1.5 bps at 2.84% on Thursday. They hit 2.894% on Wednesday, their highest level since mid-March. The gap between U.S. and German yields dropped to 126.01, its lowest since June 2023.