Big shift in capital! AI fanaticism was suddenly hit by Oracle's “cold water” earnings report, and the Dow surged 1.3% to counterattack cyclical stocks

The Zhitong Finance App learned that US stocks closed higher in volatile trading. Oracle (ORCL.US)'s latest earnings report once again raised concerns about whether technology companies could profit from their artificial intelligence investment plans, and then buyers poured into the market on dips. The S&P 500 rose 0.2%, reversing early trading losses and achieving a record closing price for the first time since late October.

The Nasdaq 100 index fell 0.4%, and the Bloomberg Big 7 US stock index fell 0.6%. Oracle's stock price plummeted 11% after the company said the latest quarter's capital expenditure (a measure of data center spending) was about $12 billion, up from $8.5 billion in the previous quarter.

Chris Zaccarelli, chief investment officer at Northlight Asset Management, wrote in an email: “Although Oracle dragged down the NASDAQ index and the tech sector, as the market digested yesterday's dovish remarks by Federal Reserve Chairman Powell, other cyclical sectors such as finance, industry, and materials all performed well today, leading to an expansion in the breadth of the market and a direct impact on the Dow Jones Index.”

Weighted indices such as the S&P 500 rose 0.8%. The blue-chip Dow Jones Industrial Average rose 1.3%, setting its best one-day performance against the S&P 500 since January.

Due to huge capital expenditure on artificial intelligence development, Oracle and its peers have been in the spotlight in recent months, and Wall Street is skeptical about the cost and time required to build a data center on a large scale. The stock price of Nvidia (NVDA.US), a major stock among the Big Seven US stocks, fell by more than 1%, while Alphabet (GOOGL.US) stock price fell 2.4%.

The market trend on Thursday came after Federal Reserve officials ended their last meeting in 2025 on Wednesday and announced interest rate cuts for the third time in a row. Meanwhile, Federal Reserve Chairman Powell praised the strength of the US economy.

Traders also analyzed economic data during the intraday session. The increase in the number of people applying for unemployment benefits in the US last week was the highest since the outbreak of the epidemic. Due to a surge in exports, the US trade deficit unexpectedly narrowed to its lowest level since mid-2020 in September.

Broadcom (AVGO.US), which released earnings after the market, gave a strong revenue forecast for this quarter, indicating that demand for artificial intelligence data center equipment is driving its growth.

Meanwhile, skepticism surrounding Netflix's (NFLX.US) proposed acquisition of Warner Bros. Discovery (WBD.US) caused Netflix's market value to shrink by $40 billion in just six trading days. For retail traders, this sent a loud buy signal. As of Monday, Netflix was the third-most active stock traded on the Yingtou Securities platform.

Other company news: OpenAI and its investor Microsoft have been indicted in a murder-suicide case in Connecticut. This is the latest case to blame the popular ChatGPT chatbot for dangerous psychological manipulation of users. Coca Cola said CEO James Quincey will step down and the company's chief operating officer Henrique Braun will take over the position at the end of March. Lululemon Athletica (LULU.US) said CEO Calvin McDonald will step down and the company is looking for a replacement.

The next-generation obesity injectable drug developed by LY.US (LLY.US) helped patients lose nearly a quarter of their body weight. This experimental drug may be the most effective weight loss drug to date. The company's shares rose 1.6%.