The Dow Jones Industrial Average inched up at Thursday's opening bell and rallied throughout the trading session to set a new all-time closing high as the prospect of lower borrowing costs boosted sectors beyond technology and the AI spending boom. It was a different story for the Nasdaq Composite and the S&P 500.
Visa (V, +6.1%) led 22 of the 30 Dow Jones stocks into positive territory after BofA Securities upgraded it to Buy from Neutral and reiterated a $382 12-month target price, potential upside of more than 10% vs Thursday's closing price.
At the other end of the spectrum, Nvidia (NVDA, -1.6%) suffered amid more questions about the sustainability of revolutionary levels of spending on infrastructure to support artificial intelligence (AI).
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Meanwhile, Barclays analyst Pooja Sriram suggests we're "through the looking glass" when it comes to Consumer Price Index (CPI) data for November, which will highlight the economic calendar next week.
The Bureau of Labor Statistics (BLS) will release the November CPI report on December 18, a week later than planned, Sriram notes. She adds that the BLS won't publish headline and core CPI data for October.
"On balance," Sriram observes, "markets will have to rely on two-month price changes from September to November, and the annual rate for November." Because the BLS is not offering guidance for the missing October data, "the November report is unlikely to be seen as a 'clean' read on inflation."
By the closing bell, the blue-chip Dow Jones Industrial Average was up 1.3% to 48,704, a new all-time closing high, and the broader S&P 500 came back from a negative open to post a 0.2% gain to 6,901, also a new all-time closing high. The tech-heavy Nasdaq Composite recovered from its intraday lows but shed 0.3% to 23,593.
With small-cap stocks seen to benefit more from lower interest rates than large-cap stocks, the Russell 2000 added 1.2% to 2,591, and also reached a new all-time closing high.
AI boom or AI bubble?
Whether we're in an AI boom or an AI bubble is perhaps the dominant question for markets following the December Fed meeting. Oracle (ORCL, -10.8%) has given investors, traders and speculators fresh evidence to process.
Oracle announced fiscal 2026 second-quarter earnings of $2.26 per share (+53.7% year over year) on revenue of $16.06 billion (+14.2% YoY) after the closing bell on Wednesday.
But Wall Street expected earnings of $1.64 per share on revenue of $16.19 billion. And, as Louis Navellier of Navellier & Associates observes, management offered weak guidance and also raised its fiscal year capex budget to $50 billion.
"The report clouded the profitability timing for AI in general," Navellier notes, "as well as the challenge of financing the truly massive data center build-out that the industry has on the table."
Indeed, Oracle "has pricked the AI bubble in a big way" and, at the same time, "thrown a wet blanket on the expected start to the Santa Claus rally that should be happening following the more dovish-than-expected Fed cut."
All that aside, Deutsche Bank analyst Brad Zelnick reiterated his Buy rating and his $375 12-month target price despite "mixed metrics" that "fell shy of heightened expectations."
According to Zelnick, it should come as little surprise that Oracle missed its top-line numbers because management's "guidance tends to be more aspirational than most other companies," and it hits about half the time.
Still, Zelnick writes, "There were a number of important reveals" in Oracle's results. The analyst highlights cloud infrastructure growth of 66% that topped his forecast for 63% but missed the Wall Street estimate of 68%.
"The important point here is that it implies significant [market] share gains and continued acceleration from 54% last quarter and 52% a year ago," Zelnick concludes.
Broadcom (AVGO, -1.6%) will offer another chipmaker's perspective on the AI revolution when it takes its turn on the earnings calendar after Thursday's closing bell.
MO is still smokin' (for now)
Altria Group (MO, +0.1%) is one of those recession-proof stocks because demand for its products is consistent throughout the economic cycle; people will smoke (and drink and gamble) during expansions and recessions. Strong brands also support strong dividend growth.
At the same time, the tobacco giant has implemented a "Move Beyond Smoking" strategy as part of its long-term planning, and a new CEO will be leading the transition as of May 2026.
Altria announced that CEO Billy Gifford will retire next spring and will be replaced by Chief Financial Officer Salvatore Mancuso. Chief Strategy and Growth Officer Heather Newman will succeed Mancuso as CFO.
"Overall, we view today's announcement positively as we believe this will be a seamless transition and limit disruption of MO's ongoing transformation," Goldman Sachs analyst Bonnie Herzog writes, adding that Mancuso's appointment is the result of long-term planning.
Gifford, who's been with Altria for more than three decades and served as CEO since 2020, will remain as a consultant at least through 2026.
Herzog, who has a Buy rating and a $72 12-month price target for MO stock, notes the outgoing CEO navigated multiple challenges while executing a long-term vision and delivering strong returns for shareholders.
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