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US stocks slipped on Thursday, with disappointing results from Oracle puncturing a rally prompted by the Federal Reserve cutting interest rates.
The tech-heavy Nasdaq Composite index fell 0.7 per cent when markets opened in New York, and the S&P 500 fell 0.4 per cent.
In earnings published after the market closed on Wednesday, Oracle’s third-quarter revenue of $16.2bn fell short of analysts’ estimates and forecasted capital expenditure jumped, bringing a swift end to a stock market bounce prompted by the Federal Reserve’s decision to cut interest rates earlier in the day.
The database company’s shares dropped 15 per cent in early trading on Thursday.
“Even as investors were reassured by the Fed’s latest rate cut, familiar concerns about AI are still very much top of mind right now,” wrote Jim Reid, global head of macro research at Deutsche Bank, describing Oracle’s results as “disappointing”.
Neil Birrell, chief investment officer at Premier Miton, said the sharp drop in Oracle’s share price showed “the massive sensitivity to expectations” for big US tech companies.
US stocks had traded close to record highs earlier on Wednesday after the Fed cut interest rates to a three-year low, as Wall Street had widely anticipated.
“The tone of the press conference was less hawkish than feared,” said Mohit Kumar, chief European economist at Jefferies, pointing to Fed chair Jay Powell’s focus on weakness in the labour market. “The door remains open for further easing,” Kumar said.
Asian stocks fell earlier on Thursday, following the Oracle results. South Korea’s Kospi 200 dropped 0.9 per cent, as did Tokyo’s Topix. South Korean chipmaker SK Hynix fell 3.7 per cent.
Hong Kong’s Hang Seng tech index dropped 0.8 per cent.
Government bonds rallied, supported by the Fed rate cut and a movement towards assets perceived by investors to be safer.
The yield on benchmark 10-year US Treasuries dropped 0.05 percentage points to 4.11 per cent. The 2-year yield dropped 0.06 percentage points to 3.51 per cent. Yields move inversely to prices.
Bitcoin extended recent losses, dropping 2.3 per cent to $90,261 a token.
