US stocks fall as Alphabet sinks on growth concerns

Alphabet's stock took a significant hit on Thursday, contributing to a downward trend in the US market. The company, behind Google and YouTube, reported lower summer growth than anticipated, raising concerns about the return on its massive investments in artificial intelligence technology. As a result, the S&P 500 fell by 0.3 percent, on track for its first loss in four days, while the Nasdaq composite dropped 1.2 percent.

Despite this, most other stocks on Wall Street were up, with the Dow Jones Industrial Average slipping by only 0.2 percent. Alphabet's 11.8% loss put it on course for its worst day since trading began over two decades ago. The company had increased spending on property and equipment, exceeding $51 billion, which led to a decline in free cash flow.

The AI industry is under scrutiny due to doubts about the profits and productivity gains from the AI revolution, as well as the escalating costs of borrowing money to acquire more chips. However, other companies reported stronger summer profits, including KLA Corp, Eli Lilly, Mastercard, and Merck. DoorDash also saw a boost after announcing a deal to acquire Instacart for $17 billion and exceeding profitability expectations.

Norwegian Cruise Line Holdings also saw a significant gain after surpassing profit and revenue expectations for the summer. While the overall US economy may have grown more than expected during the summer due to consumer spending and AI investment, actual income growth for Americans slowed in September, and inflation concerns have worsened.

Unemployment claims have decreased, suggesting few layoffs across the country. The 10-year Treasury yield followed the stock market trend, easing to 4.98 percent from 5.05 percent earlier in the day.