Alphabet stock crash pulls U.S. markets to first loss in four days

Alphabet shares suffered their steepest single-day decline since going public more than 20 years ago, dragging the U.S. stock market into a loss on Thursday. The technology giant, which operates Google and YouTube, saw its Class A shares drop 12.6%. This marked the first daily loss for the S&P 500 in four sessions.

The decline followed a report late Wednesday showing that Alphabet burned through more cash during the summer quarter than analysts anticipated. The company’s purchases of property and equipment exceeded $51 billion. This spending fueled concerns that massive investments in artificial intelligence may not generate sufficient returns to justify the cost.

The broader market absorbed the shock despite strong performance from most other major companies. The Nasdaq composite tumbled 1.4%, falling 365.13 points to close at 26,184.72. The Dow Jones Industrial Average dropped 132.54 points, or 0.3%, to finish at 52,342.56. The S&P 500 slipped 23.59 points to 7,720.39. Without Alphabet’s decline, the S&P 500 would have closed higher, as four out of every five stocks in the index rose.

Several large corporations reported stronger summer profits than expected, providing support to their respective shares. Eli Lilly stock climbed 6.6%, while Mastercard rose 4.2% and Merck added 3.8%. KLA Corp., a semiconductor equipment manufacturer, jumped 5.5% after beating profit estimates. DoorDash shares rose 5.6% after the company announced an agreement to acquire Instacart in a deal valued at $17 billion. DoorDash also exceeded expectations for quarterly profit and revenue.

Norwegian Cruise Line Holdings saw its stock surge 13.4% after topping forecasts for summertime profit and revenue. The company reported that passengers spent more money on board ships than initially projected. These gains helped offset the heavy selling in tech stocks, though the overall mood remained cautious as investors weighed the cost of borrowing money for AI data centers.

In the bond market, yields eased after mixed economic data. The yield on the 10-year Treasury fell to 4.94% from 5.05% late Wednesday. This decline followed reports that the overall economy may have accelerated in the summer due to consumer spending and AI investment, even as income growth in September disappointed and inflation measures worsened. Fewer U.S. workers applied for unemployment benefits last week, suggesting layoffs remain low.

Oil prices also contributed to the lower yields, with Brent crude falling 0.8% to $110.80 per barrel. In Europe, indexes rose after the European Central Bank held interest rates steady. Bank President Christine Lagarde stated she will resign in February, nine months before her term ends. In Asia, markets were mixed, with South Korea’s Kospi index falling 1.2% as Samsung Electronics dropped 4.1% despite a jump in reported profits.