The S&P 500 closed down 1.16% yesterday, marking four straight losing sessions for the index, which is now off 2.6%% from the all-time high it hit on Dec. 11. The decline was led, as usual, by technology stocks. Oracle was down 5.4% and its AI data center rival CoreWeave lost more than 7%.
Two things pummeled the tech sector:
First, “Big Short” investor Michael Burry published a chart from Wells Fargo on X showing that stocks now composed a greater portion of U.S. household wealth than real estate. That has happened only twice before in history, once in the 1960s and then again immediately before the dot com crash of 2000. “The last two times the ensuing bear market lasted years,” Burry said.
“Reasons for this are many but certainly include the gamification of stock trading, the nation’s gambling problem due to its own gamification, and a new ‘AI’ paradigm backed by trillions [of dollars] of ongoing planned capital investment backed by our richest companies and the political establishment. What could go wrong?” Burry argued.
Second, Oracle failed to close a deal for $10 billion in debt-based funding from Blue Owl Capital for a new AI data center in Michigan, according to the Financial Times. The company admitted it would not partner with Blue Owl but told the FT it was pressing ahead with the plan on schedule.
Wall Street is increasingly unimpressed with Oracle’s debt. “With over $100 billion in outstanding debt, investors continue to grow more concerned about the company’s borrowing to fund its AI ambitions,” Bespoke Investment Group told clients in an email this morning.
Jim Reid and his colleagues at Deutsche Bank noted that the spread on Oracle’s credit default swaps—the yield premium that investors demand for the risk of buying them—which was already notably wider than comparable companies, got even wider.
“That FT report … heightened concerns around a potential AI bubble, and meant that Oracle’s five-year credit default swaps climbed to 156 basis points, their highest since the GFC [Great Financial Crisis],” they said. “So tech stocks led yesterday’s declines, with the [Magnificent Seven tech stocks] (-2.12%) having its worst day in over a month, led by a -3.81% slump for Nvidia.”
The net new supply of AI-related debt from all tech companies doubled this year to $200 billion, according to research by Goldman Sachs, and now accounts for 30% of all corporate debt issuance.
KKR published its 2026 “outlook” yesterday and it was notably sceptical about AI data center construction. In a section titled “Speculative Data Center Projects with Uncompetitive Cost Structures,” the private equity company wrote: “We see some excess exuberance in data centers … estimates point to almost $7 trillion in global data center infrastructure capital expenditures by 2030, an amount roughly equal to the combined GDP of Japan and Germany. As always, unit economics are key. Developers who focus on return on invested capital after power, capital and maintenance capex costs will do well, while those who focus on theoretical total addressable markets and lose sight of unit economics are likely to suffer.”
Economist Ed Yardeni told clients that “The Mag-7 may be undergoing a correction.”
“In recent weeks, investors have started to fret that the spending is depleting the Mag-7s’ cash flows and slowing profits growth. Before AI, the Mag-7 had lots of cash flow because their spending on labor and capital was relatively low. That changed once AI forced them to spend much more on both,” he said.
“We aren’t ruling out a Santa Claus rally over the remainder of the year. However, that is unlikely to happen if the S&P 500 continues to rotate away from the Magnificent-7 toward the Impressive-493, as we expect.”
Here’s a snapshot of the markets ahead of the opening bell in New York this morning:
S&P 500 futures were up 0.39% this morning. The last session closed down 1.16%.
STOXX Europe 600 was up 0.21% in early trading.
The U.K.’s FTSE 100 was up 0.29% in early trading.
Japan’s Nikkei 225 was down 1.03%.
China’s CSI 300 was down 0.59%.
The South Korea KOSPI was down 1.53%.
India’s NIFTY 50 was flat.
Bitcoin was at $87K.
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Speaker Mike Johnson had a ready-made refrain when asked why Republicans weren’t moving to extend federal health care subsidies: their party wanted to help 100% of Americans with their costs, not just the 7% of Americans enrolled in Affordable Care Act plans.
A rare revolt from the moderate wing of the party has upended Johnson’s plans. Four Republicans this week signed onto a Democratic discharge petition that guarantees that the House will vote on extending the ACA subsidies sometime in January, with Republican leaders now powerless to stop it.
For Democrats, it was vindication of a months-long strategy, starting with the government shutdown in the fall, that pushed the expiration of the ACA support to the forefront of politics. Republicans from competitive districts most at risk of losing their seats in next year’s midterms felt the political pressure as they heard from constituents about their skyrocketing premiums.
“Nothing has changed with House Republican leadership, but something has changed within their own ranks,” said Rep. Pete Aguilar, chair of the House Democratic Caucus.
Flanked by his caucus Thursday on the Capitol steps, House Democratic Leader Hakeem Jeffries demanded that Johnson allow a vote on the three-year extension of ACA subsidies before lawmakers leave for the holidays: “Not tomorrow. Not next week. Not next year. Today.”
Johnson refused, saying it will “be on the floor that first week of January when we return.”
Lawmakers prepare to leave in limbo
The impasse left lawmakers with a cliffhanger as they headed home for the holiday break. Republican leaders now face growing pressure to appease centrist members who are threatening to side with Democrats to approve an extension of Affordable Care Act subsidies for three years.
Senate Majority Leader John Thune has to confront the issue as well. Any ACA bill clearing the House would simply push the fight to the Senate, which has already rejected a three-year extension.
A bipartisan group of senators has been meeting and discussing possible compromise bills that would extend the subsidies but put new limitations on them. But they would not consider anything until January.
Thune told reporters Thursday that a three-year extension of “a failed program that’s rife with fraud, waste and abuse is not happening.”
Yet Republican leaders in both chambers have not offered a plan that fully addresses members’ concerns about the sharp insurance cost increases many Americans are expected to face in 2026 and potentially beyond.
The White House has been engaged in discussions about the healthcare proposals but has largely allowed House Republicans to sort out their internal divisions and coalesce around a plan on their own, according to a senior administration official involved in the talks who was granted anonymity to discuss private discussions.
House Republicans on Wednesday passed a 100-plus-page health care package centered on long-standing GOP priorities, including expanding coverage options for small businesses and the self-employed. The bill would also rein in pharmacy benefit managers — middlemen that manage drug costs and process insurance claims.
Johnson touted the measure as “a bigger and better and more important thing for 100% of Americans, not just 7% of Americans.” But some Republicans who face tough reelection bids remain fixated on the looming spike in ACA costs.
The holidays provide Johnson with a brief window to try to persuade moderates to abandon the effort. The discharge petition froze once it reached the 218-signature threshold, meaning that while only four Republicans have publicly signed on, more may be willing to support the Democratic bill.
Rep. Ryan Mackenzie, one of the four Republicans who signed the Democratic petition, said it has “generated more conversations” and that “hopefully over the next three weeks, we will actually see some changes in some bipartisan efforts that actually can generate a meaningful vote that gets 218 in the House and 60 in the Senate.”
“I think allowing a vote is critically important,” Mackenzie said. “I think everybody should be able to put up their votes on the board, and they should be able to let everybody in the American public see how they voted on these individual issues.”
Leader Jeffries’ waiting game pays off
For months, Jeffries refused to support a one-year extension of ACA subsidies that a bipartisan group of lawmakers had been pursuing, dismissing it as a “non-starter” and “a laughable proposition.”
Instead, he held firm on a three-year extension with no income caps or cost offsets. That strategy paid off, as GOP moderates were forced to move in his direction when Johnson refused to allow any vote on an ACA extension.
Jeffries has faced criticism this year from progressive members of his caucus and grassroots groups who have urged him to push back more forcefully against Trump and Republicans. But on Thursday, much of the party rallied behind him on the Capitol steps, with several lawmakers praising his approach.
“As Leader Jeffries has said all along, this is the only real plan on the table,” said Aguilar.
Still, while Democrats have secured a vote, insurance costs for millions are set to rise next year, and passage of a three-year ACA subsidies extension remains a long shot even if it does pass the House. Senate Republicans have already rejected the three-year extension, but some GOP senators who are open to a deal on the subsidies said a House vote could provide momentum.
“We could have a vehicle — if we could get Republicans and Democrats behind it — then we could send it back,” said GOP Sen. Thom Tillis, adding that it “means that there’s still a chance.”
For Democrats, the fight has also allowed them to unify around a message they believe could prove potent on the campaign trail.
“The Republican health care crisis is unacceptable, unconscionable, and un-American,” Jeffries said.
A Republican House divided
The decision by four Republicans to break with party leadership and join Democrats is only the latest sign of discontent in the narrowly divided House.
Johnson has argued that the criticism directed at his leadership — and lawmakers repeatedly bypassing leadership to force votes — is inevitable given the slim GOP majority. He said he lacks the advantages of a large majority, where “the speaker had a long stick that he would administer punishment.”
“I don’t have that, because we have a small margin,” he said. Of the ACA extensions, Johnson said leadership had “talked about it at length” with GOP moderates, describing the conversations as “some intense fellowship.”
“Everybody’s in good spirits now and everybody understands what’s happening,” he added.
Some GOP members, however, don’t appear to share that assessment. There was lingering discontent as lawmakers headed home for the holidays.
“I don’t know how we did not vote on a good bipartisan extension,” said GOP Rep. Don Bacon, adding that Democrats will use the health care issue “like a sledgehammer” on the campaign trail.
House Majority Leader Steve Scalise, R-La., insisted that Republicans are finishing the year “as united as we’ve ever been.”
“We set out on a course to do big things, not little things, and that means we’re going to have some differences along the way.”
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Associated Press reporter Mary Clare Jalonick and Kevin Freking contributed to this report.
The financially struggling Trump Media & Technology Group’s shocking, $6 billion merger with a nuclear fusion developer represents either a bet on more taxpayer dollars being invested in the first fusion player to go public—soon owned in part by the Trump family—or a belief that an influx of capital will speed up the launch of clean, limitless electricity that eventually will transform the global grid.
Trump Media’s struggling stock had plummeted nearly 70% year-to-date prior to the announcement. But the stock value spiked over 40% on the deal news with the market cap rising back above $4 billion on Dec. 18—even though TAE Technologies doesn’t plan to bring its first power plant online until 2031 to start generating revenues.
TAE Technologies CEO Michl Binderbauer recognizes the potential negative perception, but he told Fortune he’s eager to speed up the clean energy revolution that he is confident will come with the so-called merger of equals with Trump Media, which will become a Truth Social media, cryptocurrency, and fusion power conglomerate.
“In the end, if we get more scrutiny because of the deal we did, I actually don’t mind that,” Binderbauer said. “It’s perversely sounding, but I welcome it in a way because we let the technology speak.
“It’s big, bold and fast. You make a big bet with boldness at heart, and it allows you to run really fast,” he said. “I know our technology will succeed. Let it be adjudicated on a perhaps even deeper level. We need more energy; we need clean, scalable power.”
Robert Weissman, co-president of Public Citizen government watchdog group, sees it quite differently as an obviously unethical cash grab by the president and his family.
“It’s a ridiculous merger. Why in the world would those two companies merge, and why would the markets respond positively?” Weissman said. “The markets are betting on the prospect of the Trump grift expanding and for … direct federal government payments to a company whose leading shareholder is the president of the United States.”
TAE has received federal Department of Energy grants dating back to Trump’s first term and continuing through the Biden administration. As part of a reorganization announced in November, the DOE is opening a new Office of Fusion.
The deal would value the merged company at $6 billion, including debt, and Binderbauer and Trump Media head Devin Nunes would serve as co-CEOs, they said. Shareholders of each company would own about 50% of the combined company. Donald Trump Jr. would take one of the nine board seats.
Trump Media will invest up to $200 million in TAE up front and another $100 million before the deal closes in mid-2026, they said.
TAE aims to select a site for its first power plant by the end of 2026 and generate first power by late 2031, on par with the goals of some of its top competitors.
In a statement, White House Press Secretary Karoline Leavitt said the media is irresponsibly trying to fabricate conflicts of interest.
“Neither the president nor his family have ever engaged, or will ever engage, in conflicts of interest,” Leavitt said.
The DOE, Trump Org, and Trump Media did not respond to interview or comment requests.
In a media call during which no questions were allowed, Nunes said fusion power will lower energy prices, bolster national defense, and support “America’s dominance” of AI.
“Why is fusion power revolutionary? It’s because fusion power plants are now feasible at commercial scale, and they will produce reliable, cost-effective, dispatchable, and carbon-free electricity, and industrial heat with no nuclear meltdown risk or radioactive waste,” Nunes added.
The potential of fusion
The joke about fusion energy is it’s always 30 years away and not getting any closer.
However, the breakthrough scientific moment came at the end of 2022 when scientists at Lawrence Livermore National Laboratory successfully achieved “first ignition,” fusing atoms through extreme heat to generate more energy than the setup consumes for the first time ever.
Since then, TAE and other competitors have continued to make greater fusion progress on their various scientific approaches to fusion power generation.
Whereas traditional nuclear fission energy creates power by splitting atoms, fusion uses heat to create energy by melding them together. In the simplest form, it fuses hydrogen found in water into an extremely hot, electrically charged state known as plasma to create helium—the same process that powers the sun. When executed properly, the process triggers endless reactions to make energy for electricity. But stars rely on overwhelming gravitational pressure to force their fusion. Here on Earth, creating and containing the pressure needed to force the reaction in a consistent, controlled way remains an engineering challenge.
While TAE and others are targeting the early 2030s to bring the first commercial fusion power plants online, industry analysts agree it will take several additional years at least to start making a notable dent in the nationwide or even global energy grid. Still, the long-term potential remains huge.
“Fusion power is the answer to providing reliable, cost-effective, carbon-free electricity,” Binderbauer said.
TAE was founded 27 years ago—originally as Tri Alpha Energy—but stayed in stealth mode until 2015. Actor turned entrepreneur and angel investor Harry Hamlin was even a cofounder back in 1998. An Austrian-American physicist, Binderbauer served as the founding chief technology officer, eventually rising to CEO in 2018.
“Do you raise $1 billion in scaled capital over multiple years? Or do you have it come at high velocity?” Binderbauer asked. “The high velocity is critical if you want to build something quickly and efficiently.
“The concerns are very secondary.”
That’s what makes the Trump Media deal so critical, he said.
When it comes to a potential future conflict, especially with China, the U.S. may be on its back foot, claim experts at the intersection of AI and defense.
Speaking at the Fortune Brainstorm AI conference in San Francisco last week, Tara Murphy Dougherty, the CEO of defense software company Govini, said that in a conflict with China the U.S. could run out of some munitions in seven days, while China could potentially hold out longer.
“They are planning for a very protracted conflict, and would be happy to draw that fight out to bleed American stockpiles dry, because they aren’t missing the economic piece of this puzzle,” Dougherty said.
This possibility should be troubling to the U.S., and yet there is no easy fix, explained Dougherty. The U.S. stockpile of munitions and other war time resources are held up by various obstacles established over years, she said.
“Unfortunately, those stockpiles are low enough, and the United States has outsourced so much manufacturing capacity at this point, that the amount of time it will take to build the munitions and weapons systems that the United States needs is just much, much too long,” she said.
The U.S. could indeed run out some munitions especially in a conflict with China over the Taiwan strait, according to a study by the Center for Strategic and International Studies. Still, the study only singled out certain types of munitions such as long range and precision-guided munitions in under a week.
At the same time, the U.S. has the second most number of nuclear warheads, just behind Russia, and significantly more than China’s 600, according to the International Campaign to Abolish Nuclear Weapon (ICAN).
The war in Ukraine, which has escalated since Russia’s invasion in 2022, has shown the need for countries to be nimble when it comes to the resources required for war. Yet, in a war time situation it’s unclear how quickly the U.S. would be able to mobilize, Dougherty added.
“Our weapon systems and military platforms have historically low operational availability, which basically means, if we need to go to war, half the fleet is sitting in depot or at dock,” she said.
The Trump administration and Department of War secretary Pete Hegseth have tried to spur a change in the status quo. Earlier this year, Hegseth sent a memo to senior Pentagon leadership asking for the Army to restructure its acquisition systems and close redundant and inefficient programs.
Using AI, though, may be another way to help America’s war readiness, added Gary Steele, the CEO of AI-powered autonomous systems company Shield AI. Steele said AI will completely transform the aerospace and defense industry so much so that in 20 years it will look radically different.
“You’re gonna have lower cost systems, AI-led, software-led, not these super expensive, incredibly elaborate systems that just get shut down,” said Steele. “I think there’s a revolution happening, and we’re at the very beginning of that journey.”