Tech stocks led the way lower Wednesday thanks to disappointing earnings from one mega-cap company. Rising Treasury yields only created additional headwinds, though well-received quarterly results from a blue chip stock helped contain losses for the Dow Jones Industrial Average.
Specifically, the 30-stock average finished the day down 0.3% at 33,035. By comparison, the tech-heavy Nasdaq Composite slumped 2.4% to 12,821, ending in correction territory following a 10% drop from its July 19 closing high of 14,358. The broader S&P 500 fell 1.4% to 4,186.
The Dow's outperformance was a result of solid performances for insurance giant Travelers Companies (TRV) and trillion-dollar tech giant Microsoft (MSFT). TRV was the best Dow Jones stock today, jumping 4.3% after industry peer Chubb (CB, +2.0%) reported stronger-than-anticipated third-quarter earnings.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
MSFT was a close second to Travelers, though, gaining 3.1% after the company reported top- and bottom-line beats in its fiscal first quarter thanks to impressive revenue growth (+29% year-over-year) in its Azure cloud services segment. Microsoft also said it now has 18,000 customers using its Azure OpenAI service, up from 11,000 in July.
"Microsoft delivered strong cloud revenue and remains one of the favorite AI trades going forward," says Edward Moya, senior market strategist at currency data provider OANDA.
Alphabet loses $169 billion in market cap after earnings
Alphabet (GOOGL), on the other hand, saw its shares plunge 9.5% after its quarterly results showed third-quarter cloud revenue of $8.4 billion, below the $8.6 billion analysts were expecting. However, the search engine giant reported higher-than-anticipated Q3 earnings and total revenue. Today's drop cut $169 billion in market value from the mega-cap stock – the biggest single-day decline ever for a U.S. company, according to Dow Jones Market Data.
Still, CFRA Research analyst Angelo Zino kept a Buy rating on Alphabet stock. "We are encouraged by YouTube subscriber growth given momentum from the NFL Sunday Ticket, greater efficiencies as we note employee headcount was down year-over-year, and AI opportunities ahead," Zino wrote in a note to clients.
Next up on the earnings calendar is Meta Platforms (META, -4.2%), which disclosed higher-than-expected earnings after tonight's close. Amazon.com (AMZN, -5.6%) will report Thursday evening.
First look at Q3 GDP on deck
Investors will also have a heavy dose of economic reports to take in over the next two days, including tomorrow morning's initial look at third-quarter gross domestic product (GDP). The data "will likely show an acceleration to the fastest growth since late 2021, supported by robust consumer spending and higher energy output," says Bill Adams, chief economist for Comerica Bank.
The economist adds that it's unlikely this momentum will last. Slowing consumer spending, the restart of student loan repayments, the United Auto Workers (UAW) strike and a potential government shutdown could all create headwinds for the economy, Adams says.
Related content
- When Is the Next CPI Report?
- When Is the Next Fed Meeting?
- Apple Raises Prices on Many of Its Services
-
5 Easy Weatherproofing Projects That Help Prevent Damage and Save on InsuranceProtect your home from storms and water damage with these simple weatherproofing upgrades — some may help reduce your home insurance premium.
-
If Trump Fires Jerome Powell, What Happens To Savings and Mortgage Rates?President Donald Trump expressed his desire to remove Fed Chair Jerome Powell. If the president is successful, how would it impact your savings accounts?
-
Stock Market Today: No 'Powell Put'? No ProblemInvestors, traders and speculators look beyond both another Trump post and more signs of slowing economic activity.
-
Stock Market Today: Dow Drops 699 Points After Powell SpeechFed Chair Powell warned of a slowing economy and higher inflation but said the central bank isn't ready to cut rates just yet.
-
Stock Market Today: Stocks Struggle Amid Tariff UncertaintyBoeing dropped after China suspended new aircraft orders, while Bank of America and Citi climbed on earnings beats.
-
Stock Market Today: Stocks Gain on Tech, Auto Tariff TalkThe Trump administration said late Friday that it will temporarily halt tariffs on some Chinese tech imports.
-
Stock Market Today: Stocks Surge to Close a Volatile WeekIt was another day with a week's worth of both news and price action, but it ended on a strongly positive note.
-
Stock Market Today: Uncertainty Proliferates: Dow Loses 1,014 PointsWeaker-than-expected consumer inflation data wasn't enough to stabilize sentiment during another volatile day for financial markets.
-
Stock Market Today: Tariff Pause Triggers 3,000-Point Dow RallyThe bond market is sending concerning signals as the Trump administration executes its rapid reordering of global trade relationships.
-
Stock Market Today: Tariff Talks Drive Another Up-and-Down DayTrade war negotiations are happening, but the "fear gauge" is gyrating, and investors, traders and speculators are still searching for signs of a bottom.
