Dow Soars While Nasdaq Plummets—Is Oracle’s Shocking Earnings Report the Start of a Market Crash?

U.S. stocks opened mixed on Thursday as investors reacted to a series of economic indicators and corporate earnings reports. The tech-heavy Nasdaq Composite (^IXIC) and the S&P 500 (^GSPC) each saw declines of 0.7% and 0.4%, respectively. This downturn followed a robust rally on Wall Street after the Federal Reserve's recent interest-rate cut. In contrast, the Dow Jones Industrial Average (^DJI), which features fewer technology stocks, edged up approximately 0.3%.

The source of concern was **Oracle's** (ORCL) earnings report, released late Wednesday, which reignited fears regarding overspending on artificial intelligence (AI). The software giant not only missed expectations on cloud sales but also increased its data center spending by an alarming $15 billion. Following this news, Oracle's shares plummeted by about 15%, leading to broader apprehensions about tech valuations, rising debt levels, and the uncertainty of returns from hefty AI investments.

Despite the fluctuations in tech stocks, the Dow has maintained the momentum from Wednesday's market rally, buoyed by the Federal Reserve's decision to lower rates for the third time this year. Federal Reserve Chair Jerome Powell indicated that the Fed is “well positioned to wait and see” regarding future economic conditions, and highlighted the strength of the U.S. economy. He suggested that recent tariffs imposed during the Trump administration have contributed to inflationary pressures, which the Fed considers a “one-time” increase.

Additionally, a fresh report revealed that initial jobless claims surged significantly to 236,000, marking the largest increase since 2020. This figure is an increase of 44,000 claims from the previous week’s revised level of 192,000. The four-week moving average for initial claims stood at 216,750. This unexpected rise follows a period where claims had dipped to a three-year low during the Thanksgiving week. The upcoming November jobs report, delayed until next Tuesday, is expected to provide further insights into the labor market.

On a more positive note, the U.S. trade deficit unexpectedly narrowed to its smallest level in over five years, signaling a potential boost to the wider economy in the third quarter. This was attributed to a surge in exports.

As the earnings season continues, companies like **Broadcom** (AVGO), **Costco** (COST), and **Lululemon** (LULU) are set to release their financial results in the coming days, which will likely provide additional context to the evolving economic landscape.