Record high U.S. stocks as investors rotate out of tech

The S&P 500 and Dow Jones Industrial Average advanced on Thursday, with both hitting fresh closing records. The Russell 2000 index also ended the session at a new high, following the U.S. Federal Reserve’s quarter-point cut on Wednesday.

But if investors analyze Thursday’s individual stock movements, they will see not all is well with the AI play yet. Oracle shares plunged nearly 11%, a day after it reported weak quarterly revenue, higher capital expenditure and long-term lease commitments. Oracle’s slide dragged down AI-related names such as Nvidia and Micron.

In extended trading, Broadcom shares fell 4.5%. The chipmaker beat Wall Street’s expectations for earnings and revenue, but CEO Hock Tan appeared to have failed to address worries that their largest customer, Google, might eventually make more of its chips in-house. Rising memory prices would also pressure margins, while the company’s chip deal with OpenAI might not be binding.

That’s why the tech-heavy Nasdaq Composite fell 0.26% despite other major U.S. indexes hitting records. Putting the two together, that means investors are rotating out of tech into other parts of the market. The S&P 500 financials sector, for instance, closed at a fresh record, buoyed by jumps in Visa and Mastercard.

Even though the AI theme seems to be under scrutiny, other sectors are performing well on the back of a resilient U.S. economy — as signaled by Fed officials on Wednesday — and buoyed by interest-rate cut. So long as nothing throws a spanner in the works, looks like we’re all set for a happy holiday season.

— CNBC’s Kristina Partsinevelos contributed to this report.

New records for U.S. stocks. The S&P 500 and Dow Jones Industrial Average notched fresh highs on Thursday, but the Nasdaq Composite, weighed down by Oracle, underperformed and fell. Asia-Pacific markets advanced Friday, with several major indexes rising at least 1%.

Broadcom’s fourth-quarter results beat expectations. The chipmaker also saw its net income nearly double from a year ago, and revealed that Anthropic is its $10 billion customer. But shares slumped in extended trading.

Disney to invest $1 billion in OpenAI. The media giant will also allow Sora, OpenAI’s video generator, to use its copyrighted characters, under a $1 billion licensing agreement. “We think this is a good investment for the company,” Disney CEO Bob Iger told CNBC.

Reddit launches legal challenge in Australia. The county introduced a ban on social media for teens under 16, which came into effect on Wednesday. Reddit argues that the law is “invalid on the basis of the implied freedom of political communication.”

[PRO] Where will Oracle go from here? Analysts are re-looking their price targets for Oracle stock after the firm released a disappointing and confusing earnings report on Wednesday.

Trump scared Europe with his national security strategy. That’s no bad thing, ex-CIA chief says

White House’s new national security strategy gave Europe a scare last week as it warned the region faced “civilizational erasure” and questioned whether it could remain a geopolitical partner for America.

The strategy was, “in a way, going after the Europeans but, frankly, some of the Europeans needed to be gotten after because I watched as four different presidents tried to exhort the Europeans to do more for their own defense and now that’s actually happening,” David Petraeus, former CIA director and four-star U.S. Army general, told CNBC’s Dan Murphy in Abu Dhabi on Thursday.

— Holly Ellyatt