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Alphabet falls nearly 8% after downbeat incomes, heavy AI invest

Indexes: Dow up 0.47%, S&P 500 up 0.19%, Nasdaq down 0.07%

(Updates as of mid afternoon)

By Abigail Summerville and Shashwat Chauhan

The S&P 500 and the Dow increased on Wednesday, as financiers began to reject frustrating Alphabet profits and weighed the prospect of future interest rate cuts from the U.S. Federal Reserve.

Google-parent Alphabet dropped 7.3% after cloud profits growth on Tuesday and earmarking a higher-than-expected $75 billion investment for its AI buildout this year.

AI-related stocks revealed indications of recovery after being rocked last week following the soaring appeal of an inexpensive Chinese synthetic intelligence design established by startup DeepSeek. Nvidia, which registered one of the greatest losses, was up 3.3% on Wednesday.

"Ultimately, need is not going away for AI even with the DeepSeek news. They ´ re all going to need to spend more cash and that ´ s what the AI story has been. This is a fairly long cycle story," said Rob Haworth, senior investment strategist at U.S. Bank Asset Management.

Advanced Micro Devices, meanwhile, lost 8.2% after CEO Lisa Su said the company's current-quarter information center sales - a proxy for its AI income - would fall about 7% from the previous quarter.

On the information front, financiers are looking ahead to the January nonfarm payrolls report, expected to be launched on Friday.

U.S. services sector activity suddenly slowed in January amidst cooling demand, assisting curb price development, a report from the Institute for Supply Management showed on Wednesday.

"There are some issues that the Fed may need to relieve faster, that the economy is slowing, however that ´ s really positive news for the markets since they ´ re trying to find those Fed rate cuts," Haworth said.

The next Federal Open Markets Committee meeting remains in March, and while only 16.5% of traders anticipate a rate cut then, a majority of traders prepare for a cut in June, according to CME's FedWatch Tool.

Richmond Fed president Thomas Barkin said the Fed was still leaning towards more rate cuts this year, but flagged uncertainty around the effect of brand-new tariffs, wiki.asexuality.org immigration, regulations and other efforts from U.S. President Donald Trump's administration.

At 2:00 p.m. ET (1900 GMT), the Dow Jones Industrial Average increased 207.53 points, or 0.47%, to 44,763.57, the S&P 500 gained 11.61 points, or 0.19%, systemcheck-wiki.de to 6,049.49 and the Nasdaq Composite lost 12.91 points, or 0.07%, to 19,641.11.

Nine of the 11 S&P 500 sectors traded higher, with realty and energy stocks leading the gains while communication services tipped over 3%.

Shares of Apple slipped 1.2% as Bloomberg News reported that China's antitrust regulator was preparing for a possible investigation of the iPhone maker.

Fiserv advanced 7.3% as the payments company beat quotes for fourth-quarter revenue, assisted by strong need in its banking and payments processing system.

Markets likewise await developments on the tariffs front after Trump said on Tuesday he remained in no hurry to talk to Chinese President Xi Jinping to try to pacify a new trade war in between the countries.

The Cboe Volatility Index, setiathome.berkeley.edu known as Wall Street's fear gauge, dropped 6.3% to 16.1 today.

In corporate movers, FMC Corp plunged 32% after the agrichemicals manufacturer projection first-quarter revenue below estimates.

Johnson Controls jumped 12.5% as the structure options business called Joakim Weidemanis as ceo and raised its 2025 profit forecast.

Advancing concerns surpassed decliners by a 2.62-to-1 ratio on the New York Stock Exchange, and by a 1.88-to-1 ratio on the Nasdaq.

The S&P 500 published 31 brand-new 52-week highs and 12 brand-new lows while the Nasdaq Composite taped 100 brand-new highs and 85 brand-new lows.

(Reporting by Abigail Summerville in New York, Shashwat Chauhan and Sukriti Gupta in Bengaluru; Editing by Pooja Desai, Devika Syamnath, Maju Samuel and Nia Williams)