Alphabet falls nearly 8% after downbeat profits, heavy AI invest
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 earnings and weighed the possibility of future interest rate cuts from the U.S. Federal Reserve.
Google-parent Alphabet dropped 7.3% after publishing downbeat cloud earnings growth on Tuesday and earmarking a higher-than-expected $75 billion investment for its AI buildout this year.
AI-related stocks revealed signs of healing after being rocked recently following the skyrocketing popularity of a low-priced Chinese synthetic intelligence design established by startup DeepSeek. Nvidia, which signed up one of the biggest losses, was up 3.3% on Wednesday.
"Ultimately, demand is not going away for AI even with the DeepSeek news. They ´ re all going to need to spend 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 income - 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 suddenly slowed in January amid cooling need, assisting curb price growth, a report from the Institute for Supply Management showed on Wednesday.
"There are some issues that the Fed may require to reduce quicker, that the economy is slowing, however that ´ s actually favorable news for the markets because they ´ re looking for those Fed rate cuts," Haworth said.
The next Federal Open Markets Committee conference remains in March, and while just 16.5% of traders anticipate a rate cut then, a majority 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 impact of new tariffs, immigration, guidelines and other initiatives from U.S. President Donald Trump's administration.
At 2:00 p.m. ET (1900 GMT), ratemywifey.com the Dow Jones Industrial Average rose 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 getting ready for a possible examination of the iPhone maker.
Fiserv advanced 7.3% as the payments firm beat estimates for fourth-quarter profit, assisted by strong need in its banking and payments processing system.
Markets likewise await developments on the tariffs front after Trump said on Tuesday he remained in no hurry to talk to Chinese President Xi Jinping to try to defuse a brand-new trade war between the countries.
The Cboe Volatility Index, referred to as Wall Street's fear gauge, dropped 6.3% to 16.1 today.
In business movers, FMC Corp plunged 32% after the agrichemicals manufacturer forecast first-quarter revenue listed below price quotes.
Johnson Controls jumped 12.5% as the building options business called Joakim Weidemanis as primary executive officer and raised its 2025 revenue forecast.
Advancing issues outnumbered 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 brand-new highs and 85 new lows.
(Reporting by Abigail Summerville in New York, Shashwat Chauhan and Sukriti Gupta in Bengaluru; Editing by Pooja Desai, Devika Syamnath, Maju Samuel and Nia Williams)
