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

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

(Updates since mid afternoon)

By Abigail Summerville and Shashwat Chauhan

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

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

AI-related stocks showed signs of healing after being rocked recently following the skyrocketing appeal of a low-priced Chinese expert system model developed by startup DeepSeek. Nvidia, which signed up one of the most significant 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 have to spend more cash and that ´ s what the AI story has actually been. This is a fairly long cycle story," said Rob Haworth, senior financial investment strategist at U.S. Bank Asset Management.

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

On the information front, financiers are expecting the January nonfarm payrolls report, anticipated to be launched on Friday.

U.S. services sector activity suddenly slowed in January amid cooling demand, helping curb rate growth, bphomesteading.com a report from the Institute for online-learning-initiative.org Supply Management revealed on Wednesday.

"There are some concerns that the Fed might require to ease much faster, that the economy is slowing, however that ´ s really positive news for the markets because they ´ re looking for those Fed rate cuts," Haworth said.

The next Federal Open Markets Committee meeting remains in March, and while just 16.5% of traders expect 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, 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, thatswhathappened.wiki or 0.47%, to 44,763.57, kenpoguy.com the S&P 500 gained 11.61 points, or 0.19%, 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 greater, with property and utility stocks leading the gains while interaction services tipped over 3%.

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

Fiserv advanced 7.3% as the payments firm beat quotes for fourth-quarter profit, 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 speak with Chinese President Xi Jinping to try to pacify a new trade war between the nations.

The Cboe Volatility Index, referred to as Wall Street's worry gauge, dropped 6.3% to 16.1 today.

In corporate movers, FMC Corp plunged 32% after the agrichemicals manufacturer forecast first-quarter profits below quotes.

Johnson Controls leapt 12.5% as the building solutions business named Joakim Weidemanis as president and raised its 2025 earnings projection.

Advancing issues 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 new 52-week highs and 12 brand-new lows while the Nasdaq Composite tape-recorded 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)