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On Thursday, the SPDR S&P 500 ETF (NYSEARCA: SPY) closed down 1.66%, marking its steepest decline since early October. This sell-off occurred shortly after the government shutdown ended, increasing uncertainty in the market as the White House indicated that crucial October economic reports, including the CPI release, might be delayed or unavailable. Rate-cut expectations shifted from nearly certain to about 50% for December.
Major tech stocks like Meta, Oracle, and Microsoft faced significant selling pressure due to concerns over AI capital expenditures. Meta closed just under $610, approximately 23% below its September highs, even after delivering an EPS of $7.25 and a revenue increase of 26% YOY to $51.24 billion. Oracle has declined over 37% from its September highs, driven by AI spending worries and reliance on debt for expansion, while Microsoft is down roughly 9% from its 52-week high despite strong earnings.
Investors are questioning the short-term payoff of these companies’ substantial investments in AI, as the market contemplates whether the current pullbacks present long-term buying opportunities or short-term trading setups.
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