Google drags down Wall Street stocks

World

Wall Street stocks fell as Google’s parent company, Alphabet, saw shares drop 12 per cent after disappointing profits.

30 Oct 2026 01:37AM

LONDON: Wall Street's main stock indices flashed red Thursday (Oct 29) as investors dropped shares in the parent company of Google following results that fanned concerns over whether the global technology boom can be sustained.

After a mostly downbeat showing across Asia, Europe advanced, with the European Central Bank leaving interest rates unchanged after the Federal Reserve maintained US borrowing costs on Wednesday.

The euro dipped after Christine Lagarde announced she would step down as the ECB's president in February, but then rose as she signalled a likely rate hike in December.

Crude prices shed more than one per cent on reports of renewed diplomatic efforts between the United States and Iran to avoid further strikes. 

Wall Street's main stock indices were lower in midday trading, with the tech-heavy Nasdaq Composite dropping 1.3 per cent.

Shares in Alphabet plunged 12 per cent. Google's parent company reported after Wednesday's close of trading lower-than-expected profits while it maintained big spending on artificial intelligence. 

"It is a rare day when the three big US indices retreat but the small caps gain in tandem with a broad advance in Europe," said market analyst Chris Beauchamp at online trading and investing platform IG.

He noted tech fears had spread to encompass Caterpillar, the construction equipment manufacturer that is the second biggest stock on the Dow index, which faces higher costs to finance its heavy debt load as booming AI infrastructure spending drives up borrowing rates.

Underwhelming results from South Korea's Samsung Electronics also added to doubts about the returns on AI spending. 

Samsung, the world's largest maker of memory chips, delivered record quarterly profits but missed market expectations in its semiconductor division. 

South Korea's Kospi shares index closed down 1.2 per cent, while Hong Kong and Shanghai also fell. Tokyo finished higher. 

In other tech news, Microsoft posted forecast-topping revenue and profit, fuelled by its Azure cloud computing division. Its shares initially rose but then fell into the red.

"Tech earnings will remain in focus today with Amazon and Intel reporting" after the US close, said Deutsche Bank's Jim Reid. 

Markets had enjoyed a healthy run-up in the previous two days as traders welcomed strong reports from South Korean chip titan SK hynix and an impressive IPO filing from Claude-creator Anthropic.

There was little major reaction to the Federal Reserve's widely expected decision to hold interest rates, as it cited the need for more data in the fight against inflation, which has held stubbornly above officials' two-per cent target for five years.

Personal consumption expenditures data, the Fed's preferred inflation gauge, showed that core prices that exclude volatile food and energy products rose by 3.1 per cent year-on-year in September.

"Both headline and core PCE rose to their highest levels since May, underscoring that inflation remains a stubborn issue," said eToro US investment analyst Bret Kenwell.

Over three-quarters of investors believe the Fed will raise interest rates in December, according to CME's FedWatch tool.

Meanwhile the US economy grew at a better-than-expected annualised rate of 3.4 per cent in the third quarter, beating expectations.

Source: AFP/fs