Dow loses 100 points, S&P 500 snaps 3-day advance as Alphabet and Caterpillar tank: Live updates

On Thursday, stock markets faced downward pressure due to disappointing corporate earnings reports. The Nasdaq Composite fell by 1.38%, closing at 26,184.72, while the S&P 500 dipped by 0.3% to finish at 7,720.39, ending its three-day winning streak. The Dow Jones Industrial Average also experienced a decline, dropping 132.54 points, or 0.25%, to settle at 52,342.56.

Alphabet, the parent company of Google, saw its shares plunge by 12% after reporting third-quarter earnings that fell short of expectations for adjusted earnings per share and revenue. The company disclosed a negative free cash flow of $9.07 billion and maintained its full-year capital expenditure forecast in the range of $195 billion to $205 billion.

Another significant decline was noted in Caterpillar's stock, which dropped over 9% — marking its worst performance since March 2020. Although the industrial company reported better-than-expected revenue and earnings for the third quarter, its sales in the construction industry fell slightly short of analysts' forecasts.

Microsoft's shares also faced a downturn, reversing initial gains as its Azure cloud infrastructure business had previously boosted earnings and revenue beyond analyst predictions for its fiscal first quarter ending in September, according to LSEG. Ultimately, Microsoft's stock ended the day slightly lower.

Additionally, Neoclouds experienced a setback, as Microsoft's lower-than-anticipated capital spending commitment indicated that infrastructure partners might take longer to deliver data center capacity. Shares of CoreWeave fell about 5%, while Nebius saw a decline of more than 5% as well.

The disappointing earnings reports come amid increased scrutiny of the artificial intelligence sector. Stocks related to AI, such as the iShares Semiconductor ETF (SOXX) and the Roundhill Memory ETF (DRAM), have struggled throughout much of October but had shown signs of recovery in recent days. However, on Thursday, both funds declined, with SOXX dropping over 1% and DRAM falling more than 4%.

Art Hogan, the chief market strategist at B. Riley Wealth Management, commented on the current market conditions, stating, "I think we're in a better, more stable place in October and heading into November in the tech trade than we were in August and September. But that said, I think investors are becoming much more selective." He added that while there is less overall concern regarding technology stocks, specific announcements from individual companies can still significantly impact their stock prices.

In a related development, the Federal Reserve opted to keep interest rates unchanged on Wednesday, maintaining the central bank's benchmark rate between 3.75% and 4%. This decision was anticipated after the Federal Open Market Committee raised rates by a quarter percentage point in September. Fed officials noted that inflation remains "elevated" but indicated they are waiting for "the accumulation of more information" before considering further action.

On Thursday, the personal consumption expenditures price index—the Fed's favored inflation measure—revealed that the pace of price increases accelerated in September. The monthly figure aligned with expectations, while the annual rate came in just shy of Wall Street's estimates.