Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) closed lower ahead of the weekend, dragged down by weakness in the tech and AI sectors.
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Oracle (ORCL) stirred fears of overspending after the company raised its full-year capital expenditure guidance to $50 billion from $35 billion. In addition, reports circulated that it delayed the completion date for some of its OpenAI data centers to 2028 from 2027, although Oracle later denied the rumors. Furthermore, Broadcom (AVGO) closed with large losses after the chipmaker warned that its profit margins could fall.
“We expect Q1 consolidated gross margin to be down approximately 100 basis points sequentially, primarily reflecting a higher mix of AI revenue,” said Broadcom CFO Kirsten Spears.
On Wednesday, the Fed voted 9-3 to reduce interest rates by 25 bps, although the number of dissenting voters climbed to its highest level since 2019. Kansas City Fed President Jeffrey Schmid and Chicago Fed President Austan Goolsbee dissented in favor of holding rates steady, while Fed Governor Stephen Miran advocated for a 50 bps reduction.
Both Schmid and Goolsbee cited the risk of sticky inflation as the main factor behind their dissents. “But I’ve just been uncomfortable front-loading too many rate cuts and assuming that what we’ve seen in inflation will be transitory,” Goolsbee said on CNBC’s “Squawk Box.” Schmid added that modestly restrictive rates are necessary in order to combat inflation and the risk of an overheating economy. Core personal consumption expenditures (PCE), which is the Fed’s preferred gauge of inflation, were 2.8% in September and still above the Fed’s target of 2%.
Meanwhile, the S&P 500 (SPX) received two bullish forecasts for 2026. Fundstrat’s Tom Lee expects the benchmark index to rise to 7,700, powered by a new Fed Chair who could introduce an accelerated rate cut cycle. Betting markets favor President Trump nominating National Economic Council Director Kevin Hassett to the position.
“After 3 years >20% yearly gains, bull market still alive,” said Lee. “The significant ‘Wall of Worry’ is a tailwind for bull market.”
Goldman Sachs predicts the SPX will reach 7,700 by the end of 2026, citing strong earnings growth powered by AI productivity gains and continued strength from Big Tech stocks. Goldman Chief U.S. equity strategist Ben Snider estimates that the S&P 500 will grow its 2026 EPS by 12% to $305.
The S&P 500 (SPX) closed with a 1.07% loss, while the Nasdaq 100 (NDX) fell by 1.91%.
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