US STOCKS-S&P 500, Nasdaq poised for lower start on Oracle AI jitters

By Johann M Cherian and Pranav Kashyap

Dec 11 (Reuters) - The S&P 500 and the Nasdaq are set to open lower on Thursday as fresh worries over Oracle's hefty AI spending plans overshadow optimism over a less hawkish tone from the Federal Reserve.

Oracle slumped 13% in premarket trading after its quarterly forecast fell short of analysts' estimates and the company said annual spending would climb $15 billion compared with its earlier expectation.

The surge in costs, largely aimed at chasing AI cloud customers, raised concerns that Oracle is pouring money into artificial intelligence faster than it can turn those investments into profit.

Its shares are on track for their biggest quarterly loss since mid-2002 on worries that heavy reliance on debt financing could fuel an AI bubble similar to the dotcom bust of the early 2000s.

"Oracle has been the poster child for volatility and that will continue. The spending itself is stand-alone issue and part of the CapEx is a bit opaque," said Art Hogan, chief market strategist at B. Riley Wealth.

Shares of other artificial intelligence companies also fell in premarket trading.

Chipmakers Nvidia NVDA.O and Broadcom AVGO.O fell over 1% each, while hyperscalers such as Microsoft MSFT.O and Amazon.com AMZN.O slipped over 0.6% each and CoreWeave CRWV.O declined 4.8%.

AI bubble concerns also hurt crypto stocks such as Strategy MSTR.O, which lost 2.7%, and Bit Digital BTBT.O, which fell 3% as bitcoin BTC= briefly slipped below $90,000.

"Any sort of pullback in the legacy mega-caps because of the reaction to Oracle would be a buying opportunity," Hogan added.

In a bright spot, Eli Lilly LLY.N rose 1.2% after its next‑generation obesity drug outperformed its blockbuster treatment Zepbound, further cementing the company's lead in the rapidly expanding weight‑loss market.

At 8:36 a.m. ET, Dow E-minis YMcv1 were up 4 points, or 0.01%, S&P 500 E-minis EScv1 were down 25.25 points, or 0.37%, Nasdaq 100 E-minis NQcv1 were down 143.25 points, or 0.56%.

Wall Street's fear gauge, the CBOE volatility index .VIX, rose 0.16 points to 15.93.

Meanwhile, the Federal Reserve lowered borrowing costs by 25 basis points as expected on Wednesday. Although Chair Jerome Powell signaled a pause on further easing, investors were relieved that rate hikes were not on the horizon, at a time when markets expect higher interest rates in other developed economies by the end of 2026.

Traders see at least 50 bps of monetary easing next year on expectations that U.S. President Donald Trump's appointee to the fed chair will likely be a policy dove. White House economic adviser Kevin Hassett is the front-runner for the job.

"We're not surprised to see near-term optimism in the markets given that the Fed continues to cut rates even though the economy is growing," said Chris Zaccarelli, chief investment officer at Northlight Asset Management.

"However, we think the rose-colored glasses may come off once investors realize that the path to lower interest rates may take longer – or may not materialize at all – to the extent that they believe it will."

Data from the Labor Department showed jobless claims rose 236,000 for the week ending December 6, compared to estimates of 220,000.