Third Fed Rate Cut for 2025 Helps S&P 500 Near Record High
Stocks are up overall but tech stocks could suffer after oracle's earnings come in lower than expected.
Quick overview
- The stock market rallied after the Federal Reserve's third interest rate cut of the year, pushing the S&P 500 to near record highs.
- Oracle's disappointing quarterly earnings report caused its stock to drop over 10%, raising concerns about the impact on the tech sector.
- Despite Oracle's cloud and infrastructure businesses showing growth, the results fell short of Wall Street expectations, leading to a significant loss in company value.
- While the broader market is experiencing growth due to the rate cut, Oracle's performance may dampen investor sentiment in major technology stocks.
The stock market rallied on Wednesday after the Federal Reserve decided to make its third interest rate cut for the year, but AI market fears are escalating after Oracle’s (ORCL) quarterly earnings.
Tech stocks are expected to dip today after Oracle’s quarterly report came in low and caused the company’s stock to drop more than 10%. At the same time, the wider stock market is climbing on hopes that the newly announced interest rate cut will boost the economy.
The Fed decided to cut interest rates one last time before the year is up, meeting analyst expectations. This pushed the S&P 500 to hit a near record high of 6,898. That index is up 0.68% today and is expected to dip after the disappointing Oracle report.
Oracle May Sink Tech Stocks This Week
Because Oracle is one of the leading AI stocks, investors should be concerned about how its earnings report affects the wider tech market. Oracle reported that their cloud computing business grew by 34% over the last three months, which is weaker than expected. Their infrastructure business also grew 68%, which is weaker than anticipated as well.
These numbers might look great for other companies, but Oracle pushed ahead as an early leader in AI businesses in 2025 and has fallen short of Wall Street’s expectations for this quarter. As a result, the company has lost $70 billion of their value as their stock plummets.
Oracle stock fell by 13.32% at its lowest point, wiping out all of December’s gains. This is especially damaging to the company at this point in the year after the stock value has declined for months.
The tech company is showing strong growth, but it is not as strong as expected. Their revenue for the quarter rose by 14% to $16 billion, but they are still trying to offset the damage caused by last quarter’s announcement of an investment of $15 billion in AI development.
In premarket trading for Thursday, the Nasdaq Composite grew by 0.33%, and the Dow Jones added 1.05%. We are seeing broad stock market growth right now thanks to the Fed rate cut, but the impact of Oracle’s disappointing earnings could have serious repercussions across major technology stocks and could dampen the boost that the rate cut has provided.
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