The Dow Jones Industrial Average and the Russell 2000 made new all-time highs, driven by continued momentum following the Federal Reserve’s recent interest rate cut. The S&P 500 is still below its all-time high, weighed down by a sell-off in AI-related stocks after Oracle’s revenue missed expectations and the company announced increased spending on AI infrastructure, reigniting concerns about AI stock valuations. I have been concerned by the shape and strength of the rally in the S&P 500, now with the other indexes at new highs, the odds of a new high in the S&P are high.
Yet this bull run does not feel like we are in the midst of a bull market. I note that the FTSE 100 is not in the same position, I am not saying it won’t make a new high but the FTSE 100 is well below its all-time high. Bitcoin is also not in the same position, it is well below its all-time high. In the midst of a bull market Bitcoin would be advancing to new highs in line with the S&P 500, but it is not happening because we are probably near the end of the bull run. I also think Oracle’s earnings report was a warning to the other tech companies, this will continue to weigh on the markets. The drop in Oracle shares and its ripple effect on other AI-linked stocks like Nvidia and Broadcom is a key point of caution.
We are about to enter the last two weeks of December, with the holiday period and low volumes, markets will probably go sideways, nothing significant will happen until January.