• Indexes: Dow rises 1.34%, S&P 500 adds 0.21%, Nasdaq falls 0.25%
• Oracle update drags down some tech, AI stocks
• Value outperforms growth, small outperforms large

Dec 11 (Reuters) - The S&P 500 and the Dow boasted record closing highs on Thursday after a Federal Reserve policy update that was less hawkish than expected while the tech-heavy Nasdaq underperformed as Oracle's financial update made investors wary of artificial intelligence bets.

Oracle (ORCL.N) , opens new tab shares tumbled 10.8% in their biggest one-day drop since late January and they were the top S&P 500 decliner after the company's quarterly forecasts fell short of analysts' estimates. It had also warned that annual spending would run $15 billion higher than previously planned, stoking fears about its big push into AI.

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The cost of insuring Oracle debt against default surged as investors feared that the company's heavy reliance on debt financing could be part of an AI bubble similar to the dotcom bust of the early 2000s.

While Oracle helped drag other technology names lower, the Dow rallied along with the Russell 2000 (.RUT) , opens new tab small-cap index, which closed up 1.2% and the S&P 500 value index (.IVX) , opens new tab, up 0.6%, outperformed the growth index (.IGX) , opens new tab, which ended off 0.12%.

"The name of the game is market rotation. We're seeing small caps, the Dow and cyclicals all start to do better in anticipation of a reacceleration of global growth," said Matthew Miskin, co-chief investment strategist at Manulife John Hancock Investments.

Investors also continued to digest the U.S. central bank's update from Wednesday, when the Fed lowered borrowing costs by 25 basis points and Chair Jerome Powell signaled a pause on further easing.

However, investors were relieved that the Fed still had some rate cuts on its dot plot as it balanced still-elevated inflation with signs of labor market weakness.

Mark Malek, CIO at Siebert Financial, said that continued digestion of the Fed meeting and Powell's commentary brought a tailwind on Thursday.

"Clearly, the market was tempering itself for a more hawkish cut. Most of us were certainly anticipating Chairman Powell to come out of the gate with a little bit more of a negative tone," he said, adding that the Fed's focus on employment as "something that they have to watch carefully" was notable.

As if to illustrate that point, Thursday's data from the Labor Department showed jobless claims rose to 236,000 for the week ending December 6, compared with estimates of 220,000.

The Dow Jones Industrial Average (.DJI) , opens new tab rose 646.26 points, or 1.34%, to 48,704.01, vaulting above its November 12 closing record. The S&P 500 (.SPX) , opens new tab gained 14.32 points, or 0.21%, to 6,901.00, breaching its October 28 record close. The Nasdaq Composite (.IXIC) , opens new tab lost 60.30 points, or 0.25%, to 23,593.86.

Communications services (.SPLRCL) , opens new tab and technology stocks (.SPLRCT) , opens new tab were the biggest losers among the S&P 500's 11 major industry sectors, falling 1% and 0.6% respectively. The Philadelphia Semiconductor Index (.SOX) , opens new tab - also central to the AI-trade - closed down 0.8%.

The strongest sector gainers were materials (.SPLRCM) , opens new tab, which rallied 2.2% and financials (.SPSY) , opens new tab, which added 1.8% and was the S&P 500's biggest index point boost.

Broadcom (AVGO.O) , opens new tab shares fell 1.6% in the regular session but rose 4% in late trading after the company forecast revenue of about $19.1 billion for the current quarter, compared with Wall Street expectations for $18.27 billion, according to data compiled by LSEG.

The blue-chip Dow (.DJI) , opens new tab included several financial stocks among its top gainers. Visa V.N led the charge with a 6.1% rally while American Express (AXP.N) , opens new tab, JP Morgan (JPM.N) , opens new tab and Goldman Sachs (GS.N) , opens new tab all rose more than 2%.

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Advancing issues outnumbered decliners by a 2.2-to-1 ratio on the NYSE, where there were 673 new highs and 69 new lows. On the Nasdaq, 2,667 stocks rose and 2,087 fell as advancing issues outnumbered decliners by a 1.28-to-1 ratio.

The S&P 500 posted 52 new 52-week highs and 3 new lows while the Nasdaq Composite recorded 185 new highs and 81 new lows.

On U.S. exchanges, 17.05 billion shares changed hands, compared with the 17.39 billion 20-day moving average.

https://www.reuters.com/business/wall-street-futures-slide-oracles-forecast-revives-ai-bubble-fears-2025-12-11/