U.S. stock futures fell on Thursday after Oracle’s ( ORCL ) earnings revived AI overspending concerns, risking a Wall Street rally following the Federal Reserve’s latest interest rate cut.
Contracts on the S&P 500 (ES=F) and Nasdaq 100 (NQ=F) were down 0.4% and 0.6%, respectively, capping deeper declines in the morning. Dow Jones Industrial Average futures (YM=F), which includes less technical names, was little changed.
Oracle’s after-hours earnings brought AI spending fears back with a vengeance, killing the bullish mood that sent the S&P 500 (^GSPC) to a new record high. The software giant missed out on cloud sales and increased its already aggressive data center spending by $15 billion. Its shares lost more than 10% amid tech valuations, debt burdens and risks of non-repayment of heavy AI investments.
But the broader market recovered somewhat, after ending higher on Wednesday after a divided Fed voted to lower rates for the third time this year. Policymakers signaled a more gradual path to easing in the coming months, but Chairman Jerome Powell signaled that a January rate hike would be off the table, citing the strength of the U.S. economy.
Powell said the Fed is “in a good position to wait and see” how economic conditions develop, adding that tariffs imposed under President Trump have contributed to inflationary pressures that the central bank sees as a “one-off” increase.
It put the spotlight on Thursday’s weekly update on jobless claims, which came in much higher than expected at 236,000 after dipping to a three-year low during the Thanksgiving week. Another signal on the labor market will come from the late November jobs report, set for release next Tuesday.
Meanwhile, earnings reports are underway with Broadcom ( AVGO ), Costco ( COST ) and Lululemon ( LULU ) all set to release results.
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