Traders work on the floor at the New York Stock Exchange on June 18, 2025.
Brendan McDermid | Reuters
The Dow Jones Industrial Average reached new heights on Thursday as a Federal Reserve interest rate cut followed by disappointing Oracle results prompted investors to move out of high-flying tech stocks and into names that can benefit from a growing U.S. economy.
The 30-stock Dow rose 520 points, or 1.1%, and hit a new record high, boosted by a rise in Visa shares after the name was upgraded at Bank of America. The broad market S&P 500 shed 0.3%, while the Nasdaq Composite pulled back 0.9%.
Oracle shares tumbled 14% after the cloud computing company posted disappointing quarterly revenue and raised its spending forecast, heightening concerns about the company’s debt.
The report added more fuel to the debate about how quickly tech companies will be able to see returns on their AI investments, spurring a rotation trade. Other AI plays were trading lower, including Nvidia, Broadcom and AMD, which were each down 3%. CoreWeave fell 5%. Meanwhile, cyclical stocks like Home Depot were higher.
“The market is properly concerned with Oracle and, by extension, with the AI trade in general, because there’s literally trillions of dollars of commitments out there, but there’s clearly a difficulty in figuring out how this is going to transpire, and Oracle, to some extent, is acting like the canary in the coal mine,” said Steve Sosnick, chief strategist at Interactive Brokers.
The downbeat sentiment toward tech put a damper on the momentum garnered during the previous session, which saw the S&P 500 close just inches away from a new record after a divided Fed announced an interest rate cut for the third time this year and ruled out a rate hike. The central bank’s Federal Open Market Committee cut its key overnight borrowing rate by a quarter percentage point to a 3.5%-3.75% range and signaled a slower pace of rate cuts ahead.
Fed Chair Jerome Powell said the central bank is “‘well positioned to wait and see how the economy evolves” and noted President Donald Trump’s tariffs have been a driver of inflation.
Along with the three major indexes finishing Wednesday’s session in the green, the Russell 2000 index of small-capitalization stocks notched a record close. Smaller companies tend to benefit more from lower rates than larger companies because their borrowing costs are more closely linked to market rates.
