Wall Street Mixed as Oracle Drops 14.5% on AI Spending/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stocks opened mostly higher Thursday, but Oracle’s steep 14.5% drop pulled the S&P 500 into negative territory. Despite posting better-than-expected profits, Oracle’s AI spending raised investor concerns. Meanwhile, easing Treasury yields and gains from Disney helped balance the broader market.
Oracle Stock Drop Offsets Wall Street Gains: Quick Looks
- Oracle stock plunges 14.5%, dragging S&P 500 lower
- S&P 500 dips 0.4%, Dow up 233 points, Nasdaq falls 0.7%
- Oracle’s revenue missed forecasts; AI spending questioned
- Nvidia slides 2.8% amid AI sector uncertainty
- 10-year Treasury yield drops to 4.10% on weak job data
- Fed rate cut boosts investor optimism; more cuts expected in 2026
- Disney gains 2.1% after $1B OpenAI investment announcement
- Oxford Industries and Vera Bradley suffer sharp declines
- European stocks rise; Asian markets mixed, Nikkei falls 0.9%
Wall Street Mixed as Oracle Drops 14.5% on AI Spending
Deep Look
U.S. markets were mixed early Thursday as a steep selloff in Oracle shares cast a shadow over otherwise positive momentum on Wall Street. While the Dow Jones Industrial Average rose 233 points, or 0.5%, the S&P 500 dipped 0.4%, retreating further from its October all-time high. The Nasdaq composite fell 0.7%, reflecting weakness in tech and AI stocks.
Oracle’s AI Investment Raises Red Flags
Oracle shares plummeted 14.5%, making it one of the biggest drags on the market after the company released quarterly earnings that beat profit estimates but fell short on revenue growth. Revenue rose 14% in the most recent quarter, but that figure disappointed analysts expecting slightly higher results.
Investor concerns focused on Oracle’s aggressive investment in AI infrastructure. While the company continues to partner with Nvidia for AI chips, it also announced a strategy of “chip neutrality,” pledging to work with multiple chip suppliers based on customer preferences.
“There are going to be a lot of changes in AI technology over the next few years,” said Oracle Chairman Larry Ellison, “and we must remain agile in response to those changes.”
Still, Wall Street appears unsure whether the company’s AI spending will deliver the return needed to justify its ballooning costs. That uncertainty helped push Nvidia down 2.8%, further pressuring tech-heavy indices and reinforcing worries about overexuberance in the AI sector.
Broader Market Supported by Bond Yield Drop
Despite tech sector weakness, most U.S. stocks rose as Treasury yields continued to decline, providing support for equities. The 10-year Treasury yield fell to 4.10%, down from 4.13% Wednesday and 4.18% on Tuesday.
The drop came after the Labor Department reported a larger-than-expected increase in jobless claims, suggesting potential softening in the labor market. That could reduce inflationary pressures and prompt the Federal Reserve to maintain or even accelerate interest rate cuts.
On Wednesday, the Fed cut its key interest rate for the third time this year, and signaled that another cut may follow in 2026. Lower rates tend to boost stock prices by making borrowing cheaper and savings less attractive.
“Wall Street is banking on a softer labor market translating into more rate relief from the Fed,” noted one analyst.
Disney, OpenAI Deal Sparks Optimism
The Walt Disney Co. rose 2.1%, among the S&P’s top performers, after it announced a $1 billion investment in OpenAI and a licensing deal to bring its characters to the Sora AI video platform. The three-year agreement gives Disney a foothold in generative video content and signals its deeper integration of AI into entertainment.
The deal also includes plans to feature user-generated Sora content on Disney+, and to roll out ChatGPT across Disney’s internal operations, positioning the company as an early adopter of AI tools across both creative and enterprise segments.
Retail Sector Faces Pressure
In the retail space, Oxford Industries, the parent company of Tommy Bahama and Lilly Pulitzer, fell 15.1% after warning that customers were becoming “highly value-driven” and cutting spending during the holiday season. The company revised its full-year revenue forecast downward.
Vera Bradley suffered an even steeper drop of 26% after reporting earnings that missed expectations, citing increased costs and lower-than-anticipated holiday demand.
These results underscore continued pressure on consumer spending, especially in mid-range fashion and lifestyle brands, as inflation and economic uncertainty linger.
Global Markets Mixed
Outside the U.S., European markets edged higher, while Asian indexes were mixed. Japan’s Nikkei 225 dropped 0.9%, weighed down by a decline in SoftBank Group, a major AI investor facing similar sector headwinds.
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