'Oracle shock' leads to mixed results… Dow & S&P hit record highs [New York market briefing]

'Overinvestment' concerns Oracle, down 11%

AI bubble talk resurfaces, cooling investor sentiment for tech stocks

Buy flows shift to blue-chips and cyclical stocks

The three major New York indices closed mixed as the 'artificial intelligence (AI) bubble' debate triggered by Oracle weighed on the market. Buying concentrated more on financials and industrials than on tech stocks, which were the focus of market concerns.

On the 11th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at an all-time high of 48,704.01, up 646.26 points (1.34%) from the previous session. The S&P 500 rose 14.32 points (0.21%) to 6,901.00, while the tech-heavy Nasdaq Composite fell 60.30 points (0.26%) to 22,593.86.

Early in the session, markets came under downward pressure on worries over Oracle's large-scale investment. Oracle said after the close the previous day that its capital expenditures for fiscal 2026 were set at $50 billion, $15 billion higher than previously forecast.

Concerns about overinvestment pushed Oracle's credit default swap (CDS) premium — a measure of default risk — to its highest level since 2009. Oracle plunged 16.49% intraday, and the Nasdaq at one point fell as much as 1.46%. The Philadelphia Semiconductor Index, composed of AI and semiconductor-related stocks, also tumbled as much as 3.27%.

Susana Cruz, a strategist at Panmure Liberum, said, "Markets are now reacting much more sensitively to expanded AI investment," adding, "Oracle is particularly affected because it is funding a large portion of its investment with debt."

Investors shifted their attention from tech stocks to blue-chips and cyclical names. Buyers focused on Dow components such as Walmart, UnitedHealth Group, Boeing, Honeywell, Goldman Sachs, and JPMorgan Chase.

Matthew Miskin, co-head of investment strategy at Manulife John Hancock Investments, said, "The most important flow in the market right now is rotation," and added, "With growing expectations that the global economy will revive, small caps, the Dow, and cyclical stocks are generally delivering better performance."

The view that the U.S. central bank (Fed) was "less hawkish" than expected — including a 0.25% point cut to the benchmark rate — also likely stimulated buying. Only two members voted against a rate cut at the Federal Open Market Committee (FOMC) meeting.

In the afternoon session, bargain hunting emerged in tech stocks. Leading the rebound, Oracle trimmed its losses to close down 10.83%, and other major tech names also began to recover.

The Magnificent Seven tech giants were broadly weak. Alphabet A (-2.43%), Nvidia (-1.55%), Tesla (-1.01%), Amazon (-0.65%), and Apple (-0.27%) all fell.

By contrast, Microsoft (1.03%) and Meta Platforms, Facebook's parent company (0.4%), were stronger.

Walt Disney, which made a $1 billion equity investment in OpenAI, rose 2.42%. Eli Lilly gained 1.58% after its next-generation obesity drug showed promising results in clinical trials.

The Chicago Board Options Exchange (CBOE) volatility index (VIX) fell 0.92 points (5.83%) to 14.85.

Goh Jeong-sam, Hankyung.com reporter jsk@hankyung.com