The Wall Street surge that followed the Federal Reserve's most recent rate cut was dashed on Thursday as Oracle (ORCL) earnings rekindled concerns about the AI trade, causing US stock futures to plummet.
The Nasdaq 100 (NQ=F) and S&P 500 (ES=F) contracts fell 1.2% and 0.8%, respectively. A more moderate decline of 0.4% was observed in Dow Jones Industrial Average futures (YM=F), which contain fewer tech companies.
After Oracle's quarterly revenue was below projections, the company's stock plunged more than 10%. As investors looked for signs of a larger AI bubble, that created new worries about the demand for its cloud infrastructure products.
Wall Street is concerned about Oracle's mounting debt and dependence on OpenAI (OPAI.PVT) to meet its ambitious revenue goals.
Following a split Fed decision to drop interest rates for the third time this year, bringing the federal funds target range down to 3.5%-3.75%, the overall market ended Wednesday higher.
While generally praising the strength of the US economy, Chair Jerome Powell hinted that a rate hike would not be considered for January. However, policymakers indicated a more gradual path of easing in the coming months.
Powell stated that the Fed is "well positioned to wait and see" how the economy develops and that President Trump's tariffs have increased inflationary pressures.
On Thursday, a weekly update on unemployment claims will be highlighted, while delayed numbers on trade sales and wholesale inventories may attract more attention than normal.
In the meantime, earnings reports are still being released by Broadcom (AVGO), Costco (COST), and Lululemon (LULU), capping an uncertain season for retail and AI traders.
Due to dismal clinical trial findings, many profit warnings, and fierce competition in the obesity-drug industry, the shares have fallen more than 50% so far in 2025 and are on track for their worst year ever.
After Novo's Wegovy medication was authorized as a weight-loss treatment in 2021, several years of impressive achievements were all but erased by the downturn.
For a company that began the year as the most valuable listed company in Europe, this is an incredible turn of events. Additionally, some investors are concerned about where future sales growth will come from because the primary compound patent for semaglutide, the essential component of Wegovy and Ozempic, is scheduled to expire in the US in 2032.
Paul Major, a portfolio manager at Bellevue Asset Management, stated, "Looking at it right now, organically, their pipeline doesn't convince me that this situation is manageable."
Major, who sold Novo shares early this year, stated that until investors see a strong trigger to reassure them about Novo's future growth, the company would likely continue to decline in value.
