On June 18, 2025, traders were actively engaged on the floor of the New York Stock Exchange (NYSE) in New York City.
The S&P 500 experienced another decline on Thursday, weighed down by a significant decrease in Oracle as well as a surge in interest rates.
This comprehensive market index dropped by 0.5%, mirroring the losses of the Nasdaq Composite. Meanwhile, the Dow Jones Industrial Average plummeted by 160 points, or approximately 0.4%.
Shares of Oracle tumbled by 5%, positioning the stock for its third consecutive day of losses, amid ongoing uncertainties surrounding the artificial intelligence sector. Market movements indicate rising apprehensions over unprecedented valuations and precarious interdependencies within the AI landscape, exacerbated by recent transactions.
As of Wednesday’s close, Oracle, having previously been at the forefront of the latest bull market revival, had surpassed its recent peak by over 10%. The decline observed on Thursday was partially fueled by a sell rating from Rothschild & Co., with Redburn forecasting a 40% downturn based on the assertion that the “market materially overestimates” the enhancement of Oracle’s core cloud business stemming from recent AI engagements.
“Oracle had just a massive run-up. Some giveback and softness is probably warranted given the rapid and dramatic expansion of its market capitalization,” commented Keith Buchanan, senior portfolio manager at Globalt Investments.
He also pointed to “some skepticism” regarding the robust growth projections for the company’s cloud infrastructure reported earlier this month.
“The scale of those orders is indeed eye-catching; however, if this is concentrated among a limited number of clients from a small range of markets, it inevitably presents a risk,” he articulated to CNBC.
Accompanying Oracle in its downturn was Tesla, which fell by 3%.
A marked increase in yields further compounded the sell-off in technology stocks, prompting investors to mitigate risk exposure. The yield on the 10-year Treasury reached 4.2% following data revealing initial claims for unemployment insurance were lower than anticipated.
The Labor Department reported first-time jobless benefits filings at a seasonally adjusted 218,000 for the week ending September 20, beneath the 235,000 projected by economists surveyed by Dow Jones, and 14,000 lower than the prior week’s revised claims, which had previously spiked.
The robust jobs data, along with a significant upward revision of second-quarter gross domestic product to 3.8%, may result in the Federal Reserve exercising caution before implementing further rate cuts, thereby undermining a critical catalyst for bullish sentiments.
Investors are maintaining a cautious stance ahead of the personal consumption expenditures price index set for release on Friday, while also keeping a close watch on the potential for a government shutdown.
Should such a shutdown occur, it could lead to widespread layoffs within the federal government, as the Office of Management and Budget has indicated in a memo that agencies should prepare for “reduction in force” plans, as reported by NBC News.
Source link: Cnbc.com.
