Nasdaq Drops 1.4% as Alphabet Suffers Record Plunge

U.S. stocks fell Thursday as Alphabet’s record plunge dragged the technology-heavy Nasdaq lower, while smaller stocks rose in a split session.

The Dow Jones Industrial Average slipped 0.25 percent to 52,342.56. The S&P 500 fell 0.30 percent to 7,720.39. The Nasdaq Composite dropped 1.38 percent to 26,184.72. The Russell 2000, which tracks smaller companies, rose 1.01 percent to 2,859.22.

Alphabet, Google’s parent company, closed at 283.82 dollars, down 41.07 dollars or 12.64 percent from Wednesday’s close of 324.89 dollars. It was the stock’s largest one-day percentage decline on record, worse than its 11.6 percent fall in March 2020. The drop erased more than 500 billion dollars in market value. Shares touched an intraday low of 280.36 dollars.

The selloff followed Alphabet’s third-quarter results, released after Wednesday’s close. Revenue rose 25 percent to 127.58 billion dollars but came in just below Wall Street’s expectations of about 128.2 billion dollars. Google Cloud revenue more than doubled to 30.71 billion dollars, while Search revenue grew 12 percent to 63.35 billion dollars and total advertising revenue of 82.0 billion dollars fell short. Capital spending of 51.4 billion dollars pushed free cash flow to a negative 9.07 billion dollars, and net income fell 25 percent to 26.17 billion dollars, including an 8.7 billion dollar loss on equity securities.

The results rekindled worries about the cost of the artificial intelligence build-out. Microsoft, which reported strong cloud growth a day earlier, edged lower. Amazon fell ahead of its own report after the closing bell.

The broader market told a calmer story. Nine of the S&P 500’s 11 sectors rose, and advancers outnumbered decliners on both the New York Stock Exchange and the Nasdaq. Health care gained 2.40 percent, while technology fell 1.18 percent and communication services fell 1.87 percent.

Caterpillar fell more than 9 percent and weighed on the Dow. ServiceNow and Fortinet each fell more than 20 percent, Marvell dropped 13.24 percent, and Micron Technology and Sandisk each fell about 5 percent. Eli Lilly gained 6.63 percent after raising its full-year revenue outlook.

Fresh economic data gave the market a mixed backdrop. September inflation came in slightly cooler than economists expected, with core personal consumption expenditures prices up 3.1 percent from a year earlier, while third-quarter economic growth beat forecasts at a 3.4 percent annual rate. The Federal Reserve held its benchmark rate at 3.75 percent to 4.00 percent on Wednesday, and traders priced about an 80 percent chance of a rate increase in December, according to CME FedWatch. That pricing reflects market bets, not guidance from the central bank.

The 10-year Treasury yield eased to about 4.94 percent. The dollar index slipped 0.24 percent, the volatility index ended near 17, West Texas Intermediate crude settled at 102 dollars a barrel, and gold settled near 4,031 dollars an ounce.

Amazon and Intel were scheduled to report quarterly results after the closing bell, the next major test for the technology trade.

This article reports market movements and is not investment advice.