Stocks finished strong again on Thursday, wrapping up another solid week as 2025 gets rolling. With the Fed cutting rates and Oracle dropping the ball on earnings, traders stepped back from the red-hot AI stocks. Instead, they started moving money into companies tied more closely to the overall U.S. economy, giving the Dow and S&P 500 an extra push.
The Dow surged 646 points—about 1.3%—to close at 48,704.01, its highest finish ever. It even reached a new intraday high, aided in part by a huge leap from Visa after Bank of America upgraded the stock. The S&P 500 added 0.21% to finish at 6,901.00 for yet another closing record high. The Nasdaq was a relative laggard, falling 0.26 percent to 23,593.86 as technology investors took a breather.
Weak Oracle Earnings Pull Down Wider AI Stocks Market
All eyes were on Oracle, whose shares fell nearly 11%. The company missed revenue targets and warned that spending will ramp up next year, sending already jittery investors reeling over the debt picture and slow payback from big A.I. bets. That letdown didn’t just hit Oracle—Nvidia and Broadcom each dropped more than 1% too. Meanwhile, stocks like Home Depot—more connected to the real economy—actually gained ground.
Traders aren’t shrugging off the warning signs. With trillions already flowing into AI, Oracle’s rough quarter looked like a red flag. “There’s a lot of uncertainty about how this AI investment cycle will shake out, and Oracle’s looking like the canary in the coal mine,” said Steve So snick from Interactive Brokers. He thinks it makes sense for investors to rotate out of AI for now, given where the market stands.
Fed Rate Cut Continues to Lift Small-Cap Stocks
Tech’s stumble briefly overshadowed the upbeat mood from the previous day, when a split Fed delivered its third rate cut this year and basically ruled out more hikes. Cheaper borrowing usually helps smaller companies more than the tech giants, and the Russell 2000 proved it—setting new highs both during the day and at the close.
