Alphabet falls almost 8% after downbeat profits, heavy AI spend
Indexes: Dow up 0.47%, S&P 500 up 0.19%, Nasdaq down 0.07%
(Updates since mid afternoon)
By Abigail Summerville and Shashwat Chauhan
The S&P 500 and the Dow rose on Wednesday, as investors started to reject frustrating Alphabet revenues and weighed the prospect of future rate of interest cuts from the U.S. Federal Reserve.
Google-parent Alphabet dropped 7.3% after posting downbeat cloud profits growth on Tuesday and earmarking a higher-than-expected $75 billion investment for its AI buildout this year.
AI-related stocks showed signs of healing after being rocked last week following the skyrocketing popularity of a low-cost Chinese expert system model established by start-up DeepSeek. Nvidia, which registered one of the greatest losses, wiki.vst.hs-furtwangen.de was up 3.3% on Wednesday.
"Ultimately, demand is not disappearing for AI even with the DeepSeek news. They ´ re all going to need to invest more money which ´ s what the AI story has actually been. This is a fairly long cycle story," said Rob Haworth, senior financial investment strategist at U.S. Bank Asset Management.
Advanced Micro Devices, on the other hand, lost 8.2% after CEO Lisa Su said the business's current-quarter information center sales - a proxy for its AI profits - would fall about 7% from the previous quarter.
On the data front, investors are looking ahead to the January nonfarm payrolls report, anticipated to be launched on Friday.
U.S. services sector activity all of a sudden slowed in January in the middle of cooling demand, helping curb cost development, a report from the Institute for Supply Management showed on Wednesday.
"There are some concerns that the Fed might require to alleviate quicker, that the economy is slowing, but that ´ s actually positive news for the marketplaces since they ´ re looking for those Fed rate cuts," Haworth said.
The next Federal Open Markets Committee meeting remains in March, and while just 16.5% of traders expect a rate cut then, a bulk of traders anticipate a cut in June, according to CME's FedWatch Tool.
Richmond Fed president Thomas Barkin said the Fed was still leaning towards more rate cuts this year, however flagged uncertainty around the effect of new tariffs, migration, policies and other efforts from U.S. President Donald Trump's administration.
At 2:00 p.m. ET (1900 GMT), bio.rogstecnologia.com.br the Dow Jones Industrial 207.53 points, or 0.47%, to 44,763.57, the S&P 500 gained 11.61 points, or 0.19%, to 6,049.49 and the Nasdaq Composite lost 12.91 points, or 0.07%, to 19,641.11.
Nine of the 11 S&P 500 sectors traded higher, with property and utility stocks leading the gains while communication services fell over 3%.
Shares of Apple slipped 1.2% as Bloomberg News reported that China's antitrust regulator was preparing for a possible examination of the iPhone maker.
Fiserv advanced 7.3% as the payments company beat quotes for fourth-quarter revenue, assisted by strong need in its banking and payments processing system.
Markets also await advancements on the tariffs front after Trump said on Tuesday he remained in no rush to speak with Chinese President Xi Jinping to attempt to pacify a new trade war in between the nations.
The Cboe Volatility Index, iuridictum.pecina.cz known as Wall Street's fear gauge, dropped 6.3% to 16.1 today.
In business movers, FMC Corp plunged 32% after the agrichemicals producer projection first-quarter earnings below estimates.
Johnson Controls leapt 12.5% as the building services business called Joakim Weidemanis as primary executive officer and raised its 2025 profit projection.
Advancing issues surpassed decliners by a 2.62-to-1 ratio on the New York Stock Exchange, and by a 1.88-to-1 ratio on the Nasdaq.
The S&P 500 posted 31 brand-new 52-week highs and 12 brand-new lows while the Nasdaq Composite taped 100 new highs and 85 new lows.
(Reporting by Abigail Summerville in New York City, Shashwat Chauhan and Sukriti Gupta in Bengaluru
1
US STOCKS S & P 500, Dow Rise As Investors Digest Earnings, Rate Cut
abbeyimlay6327 edited this page 2 months ago