US equity markets finished mixed overnight, with investors rotating out of large-cap technology and into cyclical and value stocks following the Federal Reserve’s latest interest rate cut. The shift helped push blue-chip and small-cap indexes to fresh highs, even as the technology-heavy Nasdaq retreated.
The Dow Jones Industrial Average surged 646 points, or 1.34 per cent, to close at a new record of 48,704, also hitting an intraday high during the session. Gains were supported by strength in financials and consumer-linked names, including a rise in Visa after a broker upgrade. The S&P 500 edged 0.21 per cent higher to a closing record of 6,901, while the Nasdaq Composite slipped 0.25 per cent, weighed down by declines across major technology stocks.
Oracle result rattles tech and AI names
Technology stocks came under pressure after Oracle delivered a weaker-than-expected quarterly revenue result and lifted its spending outlook, raising concerns about debt levels and the pace of returns from artificial intelligence investment. Oracle shares fell nearly 11 per cent, dragging the broader sector lower.
Other AI-linked names also declined, with Nvidia and Broadcom each down more than 1 per cent. In contrast, cyclical stocks that tend to benefit from economic growth and lower interest rates outperformed, with names such as Home Depot trading higher. The divergence highlighted growing investor caution around high valuations in the AI trade and a preference for companies with more immediate earnings visibility.
Fed cut supports small caps and bonds
The Federal Reserve’s third interest rate cut of the year continued to underpin market sentiment. The move has taken the fed funds target range to 3.5 to 3.75 per cent, with policymakers signalling no intention to raise rates in the period ahead.
Lower borrowing costs provided a tailwind for smaller companies, which are more sensitive to changes in market interest rates. The Russell 2000 small-cap index rose to new intraday and closing highs alongside the Dow, extending gains from the previous session.
In fixed income, US Treasuries rallied for a second consecutive day, pushing yields to their lowest levels in a week ahead of a 30-year bond auction and the start of Federal Reserve bond purchases.
Commodities and corporate moves
In commodities, copper surged to a record high in London, rising as much as 3 per cent to US$11,906 a tonne, reflecting strong demand expectations and supply constraints.
On the corporate front, Singapore-based Sembcorp agreed to acquire Australia’s fourth-largest utility, Alinta Energy, for $6.5bn. Separately, fintech group Airwallex announced plans to spend $1.5bn establishing a base in the United Kingdom as part of its global expansion strategy.
Australian market outlook and data ahead
Australian shares are set for a strong start, with SPI futures up 88 points, or just over 1 per cent, at 8,679. Today’s local focus includes National Australia Bank’s annual general meeting, while New Zealand releases manufacturing PMI and retail spending data at 8.30am AEDT.
