Alphabet earnings miss drags US stocks lower

Alphabet reported slower summer growth and higher cash consumption, sending its shares down about 12% and pulling the S&P 500 and Nasdaq lower. The S&P 500 fell 0.4% and the Nasdaq slipped 1.4% by mid-morning, while the Dow Jones Industrial Average dropped 0.3%.

The company said free cash flow turned negative after property and equipment purchases exceeded $51 billion, raising concerns about the profitability of its large AI investments. Analysts had expected the stock to at least meet growth forecasts.

Other firms offset some of the decline. Semiconductor equipment maker KLA Corp. rose 6.4% after posting stronger-than-expected summer profits, and drugmakers Eli Lilly, Mastercard and Merck gained between 4.7% and 7.8%.

DoorDash climbed 5.8% after announcing a $65-per-share agreement to acquire Instacart, though its own quarterly results missed forecasts.

In the bond market, 10-year Treasury yields fell to 4.98% from 5.05% as investors digested mixed economic data, including stronger-than-expected consumer and business spending on AI and weaker income growth. Oil prices also retreated, with Brent crude down 2.1% to $109.26 a barrel.

European markets rose, while South Korea’s Kospi slipped 1.2% after Samsung Electronics fell 4.1% despite a profit jump.