U.S. stock futures diverged Thursday morning, with the Dow inching up and the S&P 500 and Nasdaq futures slipping as Alphabet’s third‑quarter report reignited worries over artificial‑intelligence spending.
Key points
- Alphabet’s miss underscores lingering doubts about the profitability of AI investments despite strong cloud growth.
- The Dow’s modest rise contrasts with broader tech weakness, highlighting divergent market reactions to earnings and AI risk.
- Upcoming earnings from major hyperscalers and the PCE inflation report will be key drivers of market direction later Thursday.
Futures for the Dow Jones Industrial Average rose about 0.3%, while contracts for the S&P 500 fell roughly 0.4% and Nasdaq‑100 futures dropped 1.3% in early pre‑market trading, according to data from finance.yahoo.com.
Alphabet’s earnings fell short of analysts’ sales forecasts despite reporting a 103% surge in cloud revenue, prompting a sharp sell‑off in the stock and pulling down the tech‑heavy indexes. Investors highlighted concerns over the company’s free‑cash‑flow outlook and the return on its AI investments.
Futures split on earnings and AI sentiment
Microsoft posted earnings that beat both top‑line and bottom‑line expectations, offering a brief counterpoint to the broader tech weakness. Nonetheless, the sell‑off spread to related semiconductor names, with after‑hours trading seeing the iShares Semiconductor Index ETF decline as Nvidia, AMD and Micron shares fell.
The ripple effect reached Asian markets, where South Korea’s Kospi index slipped, reflecting global sensitivity to AI‑related earnings news. Traders also awaited a suite of upcoming results, including Amazon, Eli Lilly, Mastercard, Intel and Caterpillar, which could further shape sentiment toward the AI trade.
Tech stocks tumble after Alphabet's results
Later in the day, the market will digest the Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, expected to show a 3.1% core increase year‑over‑year, adding another layer of uncertainty for investors.
Reader questions
Why did Alphabet’s earnings cause a broader tech sell‑off?
The stock fell after sales missed expectations and analysts flagged concerns about free‑cash‑flow and AI return on investment, prompting investors to reassess risk across other AI‑linked companies.
What is the PCE price index and why does it matter?
The Personal Consumption Expenditures index measures inflation from consumer spending and is the Federal Reserve’s preferred gauge; a higher reading can influence future monetary‑policy decisions.
Source: finance.yahoo.com
