Wall Street opened lower on Thursday and then split in two: technology stocks bled through the first half hour of trading while blue chips steadied, as a disappointing quarter from Alphabet dragged technology stocks lower.
The Nasdaq composite dropped 348 points, or 1.3%, to 26,202 at the opening bell and was down as much as 1.6% minutes later. The S&P 500 fell 0.6% at the open. The Dow Jones Industrial Average, down 389 points in the first minutes, had trimmed the loss to about 100 points, or 0.2%, by 10 a.m., trading near 52,393 – a morning that made the market’s divide plain: the AI trade is being repriced, and the rest of the economy’s stocks are holding their ground.
Alphabet plunges 12%
Alphabet fell 12% to about $286 a share as of about 10:05 a.m. Eastern time, deepening a premarket loss of about 10% and erasing hundreds of billions of dollars in market value in a single morning. The trigger was Wednesday night’s report: search advertising revenue fell short of expectations while spending on artificial intelligence accelerated sharply. The selling spread across technology – semiconductor and software funds tumbled, with Fortinet down 26% and ServiceNow down nearly 20% after their own reports.
Microsoft shares, by contrast, held a gain of about 2% after its own report. The two results, landing hours apart, have investors sorting the biggest AI spenders into those showing returns and those showing only bills.
What changed from the pre-market picture
Futures had pointed to a loss of about 1% for the Nasdaq 100 before the bell, and Alphabet was indicated down about 10% in the premarket. The actual open was worse on both counts. The morning’s economic data – third-quarter GDP growth of 3.4% and a 3.6% annual reading on the Fed’s preferred inflation gauge, both from the Commerce Department – kept upward pressure on interest rates a day after the Federal Reserve held steady with two officials dissenting in favor of a hike.
Against that tide, some individual names rallied on their own news: Eli Lilly rose about 4% on strong results for its GLP-1 drugs, and Carvana and Chipotle each gained more than 7% after quarterly beats.
Europe holds, and watches its own inflation problem
The European Central Bank kept its three key interest rates unchanged on Thursday. “Energy prices have continued to rise, posing upside risks to the inflation outlook and downside risks to the growth outlook,” its post-meeting statement said. European shares traded mixed after the decision.
What it means for you
For households, Thursday’s numbers add up to a simple message: borrowing stays expensive, and prices are still climbing faster than personal income. With the Fed holding its benchmark rate at 3.75% to 4%, two of its own officials arguing for an increase, and traders now expecting another hike by December, there is little relief ahead for anyone carrying a credit card balance, shopping for a car loan or waiting for mortgage rates to fall. September’s data shows the squeeze plainly: prices rose 0.5% in the month while personal income rose just 0.2%, so household income fell further behind prices. For retirement savers, a morning like this cuts both ways – a tech-heavy 401(k) feels the Nasdaq’s swings, while the Dow’s quick recovery is a reminder that one company’s bad day is not the whole market. The strong 3.4% growth reading is the counterweight, supporting hiring and job security even as it gives the Fed room to keep rates high.
What to watch
The next test comes after the closing bell, when Amazon and Intel report results – the last of this week’s mega-cap checkpoints for the AI buildout. Traders are also watching whether the Dow’s early resilience holds through the afternoon, a sign that Thursday’s selling is a rotation out of the most crowded AI names rather than a verdict on the whole market.
JBizNews Desk | Wall Street
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