Fed Rate Cut Pushes Wall Street Near Record High, But AI Sector Stumbles on Oracle's Miss

Global stock markets delivered a fragmented performance on Thursday as investors responded to the U.S. Federal Reserve’s widely expected decision to trim its benchmark interest rate. The move helped push major U.S. indexes closer to record levels. The S&P 500 gained 0.7% to finish at 6,886.68, just shy of its high from October. The Dow Jones Industrial Average advanced 1% to 48,057.75, and the Nasdaq composite rose 0.3% to 23,654.16. These gains reflected investor optimism that lower financing costs will strengthen economic conditions and support asset prices.

Although the rate cut came as no surprise, Fed Chair Jerome Powell’s remarks offered additional reassurance to markets. He noted that the central bank is now operating at a rate position considered neutral—neither stimulating nor slowing the economy—for the first time in this cycle. Powell emphasized that the Fed is carefully balancing signs of cooling employment against lingering inflation pressures. With monetary policy now at a stable setting, the Fed intends to monitor incoming economic data before deciding on its future actions, prompting speculation about further reductions in 2026.

Despite the upbeat reaction in U.S. markets, several technology-focused stocks in Asia posted notable losses. The drop followed disappointing earnings from Oracle, which raised concerns about the impact of its heavy spending on artificial intelligence projects and the potential strain on its cash flow. Oracle’s shares fell more than 10% in after-hours trading. Japan’s Nikkei 225 declined 1% to 50,087.11, influenced not only by a 6.8% slump in SoftBank Group—an influential investor in AI-related ventures—but also by expectations that the Bank of Japan could raise interest rates at its meeting next week.

Across the rest of Asia, performance was mixed. The Hang Seng in Hong Kong edged up 0.1% to 25,564.87 after the Hong Kong Monetary Authority lowered its base lending rate to 4.00%, the lowest since October 2022 and consistent with the Fed’s move. Meanwhile, mainland China’s Shanghai Composite slipped 0.5% to 3,882.72, with investors cautious ahead of November lending data. October figures had shown a sharp decline in new yuan loans, suggesting sluggish consumer activity. In Australia, the S&P/ASX 200 rose 0.2% to 8,596.40, buoyed by strong gold and mining stocks. The country’s unemployment rate remained at 4.3% in November, slightly better than forecast. South Korea’s Kospi dipped 0.3% to 4,121.68, and Taiwan’s Taiex fell 1.3%.

In U.S. corporate news, GE Vernova stood out with a 15.6% jump after the company raised its revenue projection for 2028, doubled its dividend, and increased plans for share repurchases. Other gainers included Palantir Technologies, up 3.3%, and Cracker Barrel Old Country Store, up 3.5%. In early Thursday commodities trading, U.S. crude slipped 6 cents to $58.40 per barrel, while Brent crude dropped 7 cents to $62.14. The U.S. dollar weakened slightly against the Japanese yen, moving from 156.02 to 155.90, and the euro eased to $1.1688 from $1.1696.