US stocks fell on Thursday as disappointing corporate earnings triggered renewed selling in technology shares, with Alphabet leading declines amid concerns about the sustainability of artificial intelligence investment.
The Nasdaq Composite dropped 1.38% to 26,184.72, while the S&P 500 slipped 0.3% to 7,720.39, ending a three-day winning streak. The Dow Jones Industrial Average fell 132.54 points, or 0.25%, to 52,342.56.
Alphabet plunged around 12%, wiping more than US$500 billion from its market value after the Google parent missed quarterly revenue and earnings expectations. The company also reported negative free cash flow of US$9.07 billion and maintained its full-year capital expenditure forecast of US$195 billion to US$205 billion. Microsoft finished marginally lower despite beating earnings and revenue forecasts, supported by growth in its Azure cloud business. AI infrastructure stocks also weakened as investors reassessed the pace of data centre expansion. CoreWeave fell around 5%, while Nebius declined more than 5%. Semiconductor and memory stocks also came under pressure.
Elsewhere, Caterpillar tumbled more than 9%, its steepest daily decline since March 2020, after construction equipment sales fell slightly short of expectations despite stronger overall quarterly results.
The sell-off followed Wednesday’s Federal Reserve decision to leave interest rates unchanged at 3.75% to 4%. Policymakers reiterated that inflation remained elevated, while September’s personal consumption expenditures data showed an acceleration in price pressures.
In Europe, the European Central Bank also held interest rates steady, while president Christine Lagarde announced plans to step down early.
Australian Market Outlook
Australian shares are set to open higher, with S&P/ASX 200 futures up 32 points, or approximately 0.4%, to 8,937. The positive lead comes despite heavy selling in US technology stocks, with the Australian market’s lower direct exposure to major AI companies potentially providing some insulation from the overnight declines. However, renewed concerns about AI spending, corporate earnings and persistent US inflation could continue to influence investor sentiment. Locally, investors will be watching the performance of technology and resources stocks, alongside global bond yields and the outlook for interest rates following the Federal Reserve’s latest policy decision.
