Photo: Ajay Suresh / CC BY 2.0 (cropped)
Wall Street split in two on Thursday. On one side, Alphabet shares collapsed 12.6% after its core search business missed expectations, knocking the Nasdaq sharply lower. On the other, investors poured into banks, industrials and small-cap stocks, betting that the economy outside megacap technology is doing just fine a day after the Federal Reserve held rates steady.
The Nasdaq Composite dropped 365.13 points, or 1.4%, to 26,184.72. The S&P 500 slipped 23.59 points, or 0.3%, to about 7,720, and the Dow Jones Industrial Average gave up 132.54 points, or 0.3%, to 52,342.56. The Russell 2000 small-cap index went the other way, rising about 0.8% to roughly 2,853.
The search problem. Alphabet fell 12.6% to $283.82 after reporting that Google Search revenue rose 12% to about $63 billion, below Wall Street estimates for the second straight quarter. The miss landed even as the company posted 25% growth in total revenue, to $127.6 billion, and said its cloud business more than doubled, according to its earnings release. For investors, the fear is no longer theoretical: if AI assistants keep absorbing queries that once went to search boxes, the most profitable advertising business ever built has a leak.
Meta gets the opposite verdict. Meta Platforms rose 2% to $624.52 after reporting 26% revenue growth, to $64.6 billion, and forecasting $73 billion to $76 billion for the current quarter, per its own release. Investors looked past $34.9 billion in quarterly capital spending, evidence that AI investment is still being rewarded when the ad machine keeps outpacing it. Microsoft, which reported Wednesday evening, ended little changed. Amazon fell 4.3% ahead of its results, expected after the bell.
A record quarter, a 9% plunge. Caterpillar showed how unforgiving this market is. The equipment maker posted record quarterly revenue of $20.7 billion and adjusted profit of $7.20 a share, above estimates, but the stock sank 9.3% to $647.25 as investors focused on tariff costs, swelling inventories and a cautious fourth-quarter outlook in its results statement. It was the Dow’s biggest drag by far.
The rotation trade. Away from big tech, the tape was quietly strong. The 10-year Treasury yield slipped back below 5%, to about 4.98%, and financial stocks rose 1.4%, with JPMorgan Chase up 1.3%. Boeing rebounded 3.3% after two brutal sessions, General Motors added 3.9% to extend its week-long rally, and homebuilder D.R. Horton rose 2.5%.
Oil, gold and the dollar. U.S. crude settled at $102.00 a barrel, down 0.76% after its two-day rebound. Gold eased about half a percent, to roughly $4,032 an ounce. The dollar index dipped 0.2%.
What to watch. Amazon’s report after the close caps a bruising week for megacap tech, with Apple due early next week. The deeper question the market started pricing on Thursday: in an AI-driven economy, is owning the whole index still the safe bet, or does the winning trade now belong to everyone else?
JBizNews Desk | Wall Street
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