US Markets Fall as Alphabet Drops After Slower Summer Growth

Market Losses

Alphabet shares fell 12.6 per cent in their worst day since trading began over 20 years ago. The drop dragged US markets lower because the company reported weaker growth than analysts expected. The S&P 500 fell 0.3 per cent to 7,720.39, ending a four-day winning streak even though four out of every five stocks in the index rose. The Nasdaq composite dropped 1.4 per cent to 26,184.72, and the Dow Jones Industrial Average lost 132.54 points to 52,342.56.

Tech Results

Alphabet spent over $51 billion on property and equipment during the quarter. Amazon also gave a cautious sales outlook for the holiday shopping quarter after its third-quarter results missed expectations. However, Amazon Web Services grew its sales by 39.3 per cent, reaching its fastest growth rate in nearly five years. Other companies saw strong gains, including KLA Corp up 5.5 per cent, Eli Lilly rising 6.6 per cent, Mastercard adding 4.2 per cent, Merck climbing 3.8 per cent, and Norwegian Cruise Line jumping 13.4 per cent. DoorDash rose 5.6 per cent after agreeing to buy Instacart in a $17 billion deal.

Economic Data and Overseas

In the bond market, the yield on the 10-year Treasury fell to 4.94 per cent. Brent crude oil prices dropped 0.8 per cent to $US110.80 per barrel. In Europe, the European Central Bank kept interest rates steady, and bank president Christine Lagarde announced she will resign in February, nine months before her term ends. In South Korea, the Kospi fell 1.2 per cent as Samsung Electronics sank 4.1 per cent despite a profit jump. Australia's sharemarket was set to open 32 points higher, while the Australian dollar fell to US70.34¢.

Context

Major technology firms like Alphabet and Amazon hold massive weight in US stock indexes due to their immense market value. Fluctuations in these giant tech stocks frequently drive overall market movements, even when the majority of smaller individual stocks are rising.