US STOCKS-Nasdaq slips to one‑week low as Oracle AI shock overshadows Fed relief

By Johann M Cherian and Pranav Kashyap

Dec 11 (Reuters) - Wall Street's tech‑heavy Nasdaq slid to a one‑week low on Thursday, as renewed jitters over Oracle's aggressive AI spending spree drowned out optimism sparked by a softer, less hawkish Federal Reserve.

Oracle ORCL.N plunged 14.4% after its quarterly forecasts fell short of analysts' estimates and it warned annual spending would run $15 billion higher than previously planned, stoking fears that its big push to court AI cloud customers is burning cash faster than it's generating profits.

The cost of insuring against the cloud company defaulting surged, with shares on track for their biggest quarterly loss since mid-2002. Investors fear that Oracle's heavy reliance on debt financing could fuel an AI bubble similar to the dotcom bust of the early 2000s.

"It simply shows that providing compute is no longer as much of a winning strategy, and it's going to become commoditized," said David Russell, global head of market strategy at TradeStation.

"When the industry becomes commoditized like this, there's price pressure and also questions about how do you finance it. And then you end up with more debt. That's exactly what's happening to Oracle here."

Technology stocks .SPLRCT led the S&P 500 lower with a 1.6% drop, while the Philadelphia Semiconductor Index .SOX fell 2.6%, as heavyweight Nvidia NVDA.O slid 3.7%. Broadcom AVGO.O lost 3.9% ahead of its earnings report after the closing bell.

Other AI infrastructure companies such as CoreWeave CRWV.O fell 5.3%, Applied Digital APLD.O and Nebius NBIS.O lost 3.7% and 2.2%, respectively.

At 11:34 a.m. ET, the Dow Jones Industrial Average .DJI rose 480.21 points, or 1.00%, to 48,537.96, the S&P 500 .SPX lost 23.85 points, or 0.34%, to 6,862.83 and the Nasdaq Composite .IXIC lost 248.77 points, or 1.05%, to 23,405.39.

The blue-chip Dow .DJI hit a record high, buoyed by financials and other sectors, with money rotating out of growth names and into value plays.

The S&P 500 growth index .IGX slipped nearly 1%. The iShares S&P 500 Value ETF .IVE edged up 0.3%, and has outperformed its growth peers this quarter.

Rate‑sensitive small caps outperformed, lifting the Russell 2000 .RUT 0.6%, while the equal-weighted blue‑chip Dow .DJIEW rose 1%.

The Federal Reserve lowered borrowing costs by 25 basis points as expected on Wednesday, but Chair Jerome Powell signaled a pause on further easing. Still, 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.

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

Among others, Walt Disney slipped 0.3%. The streaming firm said it will make a $1 billion equity investment in OpenAI.

Advancing issues outnumbered decliners by a 1.82-to-1 ratio on the NYSE and by a 1.03-to-1 ratio on the Nasdaq.

The S&P 500 posted 46 new 52-week highs and 2 new lows, while the Nasdaq Composite recorded 129 new highs and 63 new lows.