Global markets after the Fed rate cut movements shifted sharply on Thursday as optimism from the Federal Reserve’s latest policy decision faded. Technology stocks led declines across the United States and Asia after weaker-than-expected results from Oracle triggered a reassessment of the near-term outlook for artificial intelligence-driven growth.
Nasdaq 100 futures dropped more than 1.5 percent in early trading, while S&P 500 futures also moved lower. The pullback reversed the rally seen a day earlier, when the Fed delivered its third consecutive rate cut and signaled confidence that inflation should continue to ease next year.
Oracle Results Spark Sector-Wide Pressure
Oracle reported softer cloud revenue growth compared with market expectations, prompting a steep decline in its share price during extended trading. The company is widely followed as an indicator of enterprise demand for AI infrastructure, including large-scale data centers and computing hardware.
The earnings miss raised concerns that heavy capital expenditure in AI is taking longer than expected to translate into revenue. Asia’s technology sector mirrored the reaction, with a regional benchmark falling more than 1 percent and several large companies recording notable losses.
Fed Cut Offers Limited Support to Market Sentiment
The Federal Reserve’s policy decision initially boosted equities, but the tone quickly shifted as investors considered the central bank’s longer-term guidance. Policymakers held to their projection of only one interest rate cut in 2026, reflecting caution amid mixed economic signals.
Treasury yields eased, supported by the Fed’s plan to resume purchases of short-term securities to maintain liquidity in money markets. The two-year and ten-year yields both moved lower after a recent stretch of gains.
Asia Confronts Additional Market Headwinds
Regional markets in Asia faced further challenges as investors assessed the impact of newly approved tariffs in Mexico and anticipated another rate cut by the Philippine central bank. Japanese government bonds strengthened following a strong twenty-year auction, even as expectations build for a possible rate increase from the Bank of Japan.
In currency and digital asset markets, the US dollar stabilised, and Bitcoin declined more than 2 percent, reflecting reduced demand for higher-risk assets.
Investors Prepare for Periods of Volatility
The Fed’s divided vote, with three officials opposing the latest cut, has added to the uncertainty that markets must now price in for 2025 and 2026. Internal differences over the inflation outlook, labor market conditions, and the appropriate pace of easing are likely to influence market expectations in the coming months.
Equity markets may experience choppy trading conditions as investors track upcoming economic releases, global tariff developments, and corporate earnings from major technology firms. Broader risk appetite is expected to be sensitive to shifts in interest rate expectations, especially given the influence of US monetary policy on global financial conditions.
