Major equity indices declined after quarterly corporate reports triggered deep losses across technology and software sectors. Shares of Alphabet plummeted alongside severe drops in Fortinet and ServiceNow, ending a multi-day winning streak for semiconductor equities. Meanwhile, macroeconomic data presented a mixed landscape, featuring a robust 3.4% third-quarter GDP reading tempered by lingering inflation driven by oil supply constraints. Healthcare equities offered key market support, buoyed by solid advances from pharmaceutical giants Eli Lilly and Merck.
Key points
Disappointing corporate results have intensified investor scrutiny surrounding the immedi…: Disappointing corporate results have intensified investor scrutiny surrounding the immediate payoff of heavy artificial intelligence expenditures.
Solid economic expansion of 3.4% persists alongside inflation pressures stemming from an…: Solid economic expansion of 3.4% persists alongside inflation pressures stemming from an ongoing oil supply crunch.
Resilient healthcare gains helped mitigate steeper index losses as communication services…: Resilient healthcare gains helped mitigate steeper index losses as communication services and technology sectors slumped.
* Third-quarter GDP advance reading of 3.4% surpasses analyst expectations
* Alphabet plunges on AI cash burn
* Software stocks fall after Fortinet, ServiceNow results
By Stephen Culp and Shashwat Chauhan
NEW YORK, Oct 29 (Reuters) - US stock prices retreated on Thursday, with investors reassessing big tech's massive AI spending spree as they digested high-profile earnings, crucial inflation data and the US Federal Reserve's policy decision.
All three major US stock indexes were in negative territory, with the Nasdaq dragged sharply lower by tech and tech-related megacaps in the wake of Alphabet's disappointing quarterly results released late Wednesday.
In contrast, the smallcap Russell 2000 advanced 0.8%.
Semiconductor stocks were poised to snap their four-day winning streak, dropping 2.0% as investors sought to distinguish between companies that can fund their lofty AI ambitions from those that burn through cash and borrow funds to realize their ambitions.
Alphabet was in the latter camp following its quarterly report released late Wednesday. The Google parent's revenue miss was compounded…
Disappointing financial results and factory disruption have heightened investor anxiety across the semiconductor space, dragging down major peers during post-market trading. The drop comes as hardware valuations face scrutiny from cooling personal computer demand and stricter financing terms for artificial intelligence infrastructure. However, observers suggest the wider fallout may remain limited since the company's specific issues do not reflect the ongoing health of the broader enterprise market.
Central bank officials in Tokyo are pausing their monetary tightening cycle to evaluate how earlier policy adjustments have impacted domestic lending conditions. Persistent fuel expenses and currency depreciation recently drove core consumer price growth beyond the official threshold for the first time in nine months. Consequently, policymakers are preparing to adjust borrowing costs again by the end of the year to anchor long-term price stability.
Extended market sessions are displaying heightened activity across a wide range of corporate names following the closing bell. Both technology giants and consumer-facing enterprises are experiencing notable shifts as participants react outside standard exchange hours. This broad slate of adjustments spans social platforms, electric vehicles, and traditional retail.