Funds are shifting! AI frenzy suddenly encounters cold water from Oracle's financial report, Dow Jones Industrial Average soars 1.3% as cyclical stocks stage a comeback.

US stocks closed higher in volatile trading, with concerns over whether tech companies can profit from their artificial intelligence investment plans reignited by Oracle Corporation's (ORCL.US) latest financial report, leading to buyers stepping in to the market on dips. The S&P 500 index rose 0.2%, reversing its morning decline and achieving a record closing price for the first time since late October. The Nasdaq 100 index fell 0.4%, and the Bloomberg Seven Giants Index of US stocks dropped 0.6%. Oracle Corporation's stock price plummeted by 11% after the company announced that its capital expenditure for the latest quarter (a measure of data center spending) was about $12 billion, higher than the previous quarter's $8.5 billion. Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management, wrote in an email: "While Oracle Corporation dragged down the Nasdaq index and the tech sector, with the market digesting Fed Chair Powell's dovish comments yesterday, other cyclical sectors such as financials, industrials, and materials all performed well today, leading to a broader market breadth and directly impacting the Dow Jones index." The equal-weighted S&P 500 index rose by 0.8%. The blue-chip Dow Jones Industrial Average rose by 1.3%, marking its best single-day performance relative to the S&P 500 index since January. Oracle Corporation and its peers have been under scrutiny in recent months due to their massive capital expenditure on artificial intelligence development, with Wall Street skeptical of the cost and time required for large-scale data center construction. Weighted stocks in the US Seven Giants, like NVIDIA Corporation (NVDA.US) and Alphabet Inc. (GOOGL.US), saw their stock prices drop by over 1% and 2.4% respectively. Thursday's market movements came after Federal Reserve officials concluded their last meeting of the year on Wednesday, announcing a third consecutive rate cut. Meanwhile, Fed Chair Powell praised the strength of the US economy. Traders also analyzed economic data during the session. The increase in US initial jobless claims last week was the highest since the start of the pandemic. Due to a surge in exports, the US trade deficit unexpectedly narrowed to its smallest level since mid-2020 in September. After-hours earnings reports from Broadcom Inc. (AVGO.US) gave a strong revenue forecast for the quarter, indicating that demand for artificial intelligence data center equipment is driving its growth. Meanwhile, doubts surrounding Netflix, Inc.'s (NFLX.US) potential acquisition of Warner Bros. Discovery, Inc. (WBD.US) led to Netflix's market value shrinking by $40 billion in just six trading days, sending a strong buy signal to retail traders. As of the past week, Netflix was the third most traded stock on the Interactive Brokers Group, Inc. Class A platform. In other company news: OpenAI and its investor Microsoft Corporation were sued in a murder-suicide case in Connecticut, the latest case blaming the popular ChatGPT chatbot Siasun Robot & Automation for dangerous psychological manipulation of users. Coca-Cola Company announced that CEO James Quincey will step down, with Chief Operating Officer Henrique Braun to take over at the end of March. Lululemon Athletica (LULU.US) announced that CEO Calvin McDonald will step down, and the company is currently seeking a replacement. Eli Lilly and Company's (LLY.US) next-generation obesity injection drug helped patients lose nearly a quarter of their body weight, potentially becoming the most effective weight loss drug to date. The company's stock rose by 1.6%.