Dow hits record high while Nasdaq, S&P 500 slide as Oracle earnings revive AI spending fears

Natural gas (NG=F) continued its stark fall in price on Thursday as winter weather forecasts remain mild and US production continues to run high despite ample stores.

Futures on natural gas have fallen by more than 16% in the past five days. After reaching $5 at the end of November, a price not seen since December 2022, the energy product is now trading below $4.30.

The primary catalysts for a price drop have been a one-two punch of weather and supply. Forecasts for the winter have consistently become milder, meaning consumers will be turning on their heaters less than expected. At the same time, US dry gas production is averaging 109.7 billion cubic feet per day (bcfd) in December, a record monthly level, and storage levels are about 3% higher than the average for this time of year.

A larger-than-expected draw out of storage — at 177 bcfd for the week ended Dec. 5, according to the Energy Information Administration — likely moderated the drop, but the move was not enough to stave off a steep drop.

Signs of potential positive movement in peace negotiations in the Ukraine-Russia conflict have also pushed prices in Europe steeply down, depressing US prices in sympathy.

Elsewhere in the energy market, international crude oil benchmark Brent (BZ=F) is down roughly 2.1%, while US benchmark West Texas Intermediate (WTI) crude (CL=F) has lost roughly 2.2%.

Fundstrat Global Advisors co-founder Tom Lee, known for his bullishness, is out with his 2026 year-end outlook, in which he calls for another year of a bull market.

Lee sees the S&P 500 (^GSPC) gaining 10% to reach 7,700 by the end of 2026, driven by the Fed and blockchain adoption. He said the bull market is “still alive,” after making significant gains over the past three years.

In his view, earnings and GDP growth will be driven higher by AI and energy infrastructure, Wall Street’s shift to the blockchain, and the onshoring of manufacturing.

Lee believes a new dovish Fed that favors more cuts could be “positive for stocks” in the second half of the year. On Wednesday, the Federal Reserve cut interest rates by a quarter point but signaled a pause in rate cuts. Fed Chair Jerome Powell’s term ends in May.

Lee, also known to be bullish on bitcoin, said the “best years of growth” for the cryptocurrency are “still ahead.”

Some drivers of crypto include Wall Street’s “plans to tokenize all financial products onto the blockchain,” as well as AI and agentic AI “creating needs for de-centralized trust and security.”

Lee is the latest strategist to release his S&P 500 2026 year-end target.

Wells Fargo posted its outlook earlier this week. It sees the benchmark index reaching 7,400-7,600 in the year ahead, bolstered by a combination of consumer spending, AI investment, and deregulation.

Both of these add to a string of positive outlooks for the S&P 500 heading into 2026, with forecasts ranging from 7,100 to 8,000, according to data from TKer’s Sam Ro.

Shares in Nvidia (NVDA) fell over 3.5% Thursday morning, as weak earnings from Oracle (ORCL) reignited fears that the AI industry is overspending.

The fall continues tough stretch for the AI chip giant, with shares down roughly 8% over the past month. The leading chipmaker has been caught in worries that, like its Big Tech cohort, the company is overspending on AI development.

At the end of November, Nvidia published a memo to analysts rebutting comparisons between itself and Enron, the scandal-ridden giant whose collapse was instrumental to the stock market crash at the turn of the century.

Additionally, Nvidia faced mixed market reaction to news that the Trump administration has approved export of the company’s H200 chips to Chinese buyers. The chipmaker has also faced reports that its signature high-performance Blackwell chips — which are not approved for sale in China — are being used by the Chinese AI developer Deepseek.

The US trade deficit narrowed in September to its smallest margin in more than five years, as exports increased healthily and imports grew slightly.

The deficit shrank by 10.9% to $52.8 billion, according to data released by the Department of Commerce on Thursday, marking the lowest level seen for the measure since June 2020.

Exports rose 3% to $289.3 billion in the month, while imports rose by a much softer 0.6% to $342.1 billion. The month saw noted strength in consumer goods exports, which reached a record high in September, while on the other side, imports of automotive vehicles, engines, and other parts fell to their lowest level since November 2022.

The real goods deficit narrowed by 5.6% on the month, equal to $4.7 billion. Making up that figure, real exports of goods gained 4.2% against a gain in nominal goods exports of 4.9%, while real imports of goods gained 0.7% equal to a gain of 0.7% in nominal goods imports.

Notably, the US’ trade deficit with China — a longtime preoccupation of the Trump administration and President Trump personally — shrank to $11.4 billion from a previous $15.4 billion, a change of roughly 25%.

Oil prices extended losses by roughly another 1% Thursday morning as the Venezuelan government responded to the seizure of a crude tanker on Wednesday by the US Coast Guard and the OPEC+ cartel disregarded widespread sentiment to predict a balanced oil market in 2026.

Brent crude (BZ=F), the international oil pricing benchmark, traded down by roughly 1.1% to fall below $62, while US benchmark West Texas Intermediate (WTI) crude oil (CL=F) lost around 1.2% to trade below $58.

In Caracas, Venezuelan president Nicolás Maduro’s government condemned the seizure as an act of “international piracy.” The vessel, a crude tanker called the Skipper and previously known as the M/T Adisa, was sanctioned by the US in 2022 for supplying oil to Iran’s Revolutionary Guard and the Lebanese militant group Hezbollah, according to NPR.

Oil prices dropped on Wednesday after news of the seizure broke, marking a significant escalation in tensions between Washington and Caracas.

Elsewhere in the oil market, the OPEC+ cartel has maintained its prediction of a balanced oil market in 2026, according to Bloomberg. In a memo seen by Bloomberg, the OPEC+ nations said they will need to produce an average of 43 million barrels per day — roughly the amount of crude they produced last month — to maintain balanced supply and demand.

The posture runs counter to widespread market sentiment that oil is quickly headed for a steep oversupply glut of several million barrels per day, with prices expected to drop heavily in 2026. Analysts at Macquarie have predicted “punishing oversupply” coming for the oil market, and JPMorgan strategists wrote in a recent note that if OPEC does not curb its production, prices on Brent crude could fall as low as the $30s per barrel.

US stocks diverged at the start of trading on Thursday, as investors weighed fresh insight into the economy alongside signals from Oracle (ORCL) earnings.

The tech-heavy Nasdaq Composite (^IXIC) and generalist S&P 500 (^GSPC) slid by 0.7% and 0.4%, respectively, in the first minutes of trading.

The gauges were shaking off deeper premarket drops fueled by Oracle’s after-hours earnings on Wednesday. The software maker missed on cloud sales and raised its data center spending by $15 billion, re-stoking fears that tech spending on the AI sector would fail to deliver a payoff.

The blue chip-heavy Dow Jones Industrial Average (^DJI), which include fewer tech names, ran in the other direction to gain 0.5%.

After the Fed moved to cut rates for the third time this year, the market’s attention turned to a weekly update on jobless claims on Thursday, reading much higher than expected at 236,000 after falling to a three-year low in the Thanksgiving week.

Meanwhile, earnings reports continue with Broadcom (AVGO), Costco (COST) and Lululemon (LULU) all set to release results.

The Walt Disney Company (DIS) is set to invest $1 billion in OpenAI (OPAI.PVT) and enable users of the AI developer’s “Sora” video generation platform to use Disney’s copyrighted characters in their videos.

Shares in Disney traded up by around 0.2% in premarket trading on the news.

The partnership makes Disney the “first major content licensing partner on Sora,” according to a press release from Disney announcing the investment. The three-year licensing agreement will allow Sora users to pull from hundreds of copyrighted Disney characters for use in generated video, including those from franchises such as Marvel, Star Wars, and Pixar.

At the same time, Disney is set to “become a major customer of OpenAI, using its APIs to build new products, tools, and experiences, including for Disney+, and deploying ChatGPT for its employees,” according to the press release.

The Magnum Ice Cream Company (MICC) stock rose 5% before the bell on Thursday. A Unilever (UL) spin-off, Magnum Ice cream, made its trading debut on Monday.

Netflix (NFLX) stock rose more than 1% in premarket trading on Thursday. The streaming service is currently involved in a bidding war for Warner Bros Discovery (WBD) with Paramount Skydance (PSKY), and now President Trump has said that the sale must include CNN.

Marvell (MRVL) stock fell 2% before the bell on Thursday after a report in the Information claimed the chipmaker faced the risk of losing orders to Microsoft (MSFT) and Amazon Web Services (AMZN).

Strategy (MSTR) stock fell 2% in premarket trading Thursday. The drop follows bitcoin (BTC-USD)’s decline this morning. Strategy is one of the largest corporate holders of bitcoin.