AI bubble hold back 'Santa Rally' in stocks: analyst

Market Sentiment - The anticipated "Santa Rally" for Wall Street has not materialized, with concerns about a bubble in the AI sector dampening market enthusiasm [1][2] - Despite a dovish interest rate cut by the Federal Reserve, valuation concerns are impacting investor sentiment [2] Federal Reserve Actions - The Federal Reserve cut interest rates for the third time this year, aligning with market expectations, and indicated a "wait and see" approach regarding future rate cuts due to a weakening labor market and persistent inflation [3] Company-Specific Developments - Oracle's stock experienced a significant decline of up to 16% following its earnings report, which revealed that AI spending was outpacing returns, resulting in a loss of approximately $70 billion in company valuation [4] - The overall financial markets showed volatility, with the Dow Jones Industrial Average and S&P 500 both experiencing slight declines [4]