Wall Street indexes slip as Alphabet, AMD forecasts fan AI payoff concerns

Wall Street's main indexes fell on Wednesday, as disappointing forecasts from Alphabet and AMD fueled investor doubts around the payoff from hefty investments into artificial intelligence. 

Google-parent Alphabet dropped 8.3 per cent after posting downbeat cloud revenue growth and earmarking a higher-than-expected $75 billion for its AI buildout this year. 

"While some investors may have hoped that Silicon Valley would exercise caution in the wake of China's AI innovations, the opposite is occurring," Jochen Stanzl, chief market analyst at CMC Markets, said in a mailed statement. 

Advanced Micro Devices lost 9.9 per cent after CEO Lisa Su said the company's current-quarter data center sales - a proxy for its AI revenue - would fall about 7 per cent from the previous quarter. 

"The guidance from many of the big major corporations has been disappointing and it threatens the expectations of earnings growth for this year," said Robert Pavlik, senior portfolio manager at Dakota Wealth Management. 

Uber Technologies dropped 6.9 per cent after the ride-hailing company forecast current-quarter bookings below estimates. 

Shares of Apple fell 1.6 per cent as Bloomberg News reported that China's antitrust regulator was preparing for a possible investigation of the iPhone maker.

 

At 10:11 a.m. ET, the Dow Jones Industrial Average fell 129.61 points, or 0.29 per cent, to 44,426.43, the S&P 500 lost 25.38 points, or 0.42 per cent, to 6,012.50 and the Nasdaq Composite lost 138.66 points, or 0.71 per cent, to 19,515.36. 

Six of the 11 S&P 500 sectors traded lower, with communication services leading losses with a 3.2 per cent fall. 

On the data front, US services sector activity unexpectedly slowed in January amid cooling demand, helping curb price growth, a reading from the Institute for Supply Management showed. 

Private payrolls rose by 183,000 jobs last month, compared with an estimated 150,000 increase, per economists polled by Reuters. 

The all-important January nonfarm payrolls report is expected to be released on Friday.

 

Markets also looked for developments on the tariffs front. 

US President Donald Trump said on Tuesday he was in no hurry to speak to Chinese President Xi Jinping to try to defuse a new trade war between the countries. 

Morgan Stanley joined Barclays and Macquarie in forecasting a single 25-basis-point interest rate cut by the US Federal Reserve this year, citing uncertainty from Trump's tariff policy. 

Richmond Fed president Thomas Barkin said the Fed was still leaning towards more rate cuts this year, but flagged uncertainty around the impact of new tariffs, immigration, regulations and other Trump administration initiatives. 

Among top movers, FMC Corp plunged 35.5 per cent after the agrichemicals producer forecast first-quarter revenue below estimates.

US-listed shares of Chinese e-commerce firm PDD Holdings dropped 1.7 per cent after a report that the US was considering whether to add PDD's Temu to Homeland Security's "forced labor" list. 

Advancing issues outnumbered decliners by a 1.5-to-1 ratio on the NYSE and by a 1.25-to-1 ratio on the Nasdaq. 

The S&P 500 posted 23 new 52-week highs and 11 new lows, while the Nasdaq Composite recorded 59 new highs and 59 new lows.   

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)