US Stocks Fall as Alphabet Shares Drop Nearly 13 Percent

Renewed concerns about artificial intelligence investment and weaker-than-expected sales at Alphabet sent US stocks lower on Thursday, October 29, 2026, as investors reassessed technology valuations following major corporate earnings reports. The sell-off hit technology-heavy indexes particularly hard, with Alphabet shares falling nearly 13 percent amid questions about the company's cash generation and returns on AI spending.

The Dow Jones Industrial Average declined nearly 0.3 percent, while the S&P 500 dropped approximately 0.3 percent, according to market data reported by Yahoo Finance. The Nasdaq Composite fell about 1.4 percent as technology stocks reversed gains recorded earlier in the week.

Alphabet, Google's parent company, reported third-quarter results that disappointed investors on sales despite strong growth in its cloud business. Cloud growth reached 103 percent, but concerns about free cash flow and the financial returns from artificial intelligence investments weighed heavily on the stock.

Microsoft delivered a stronger earnings performance, exceeding analyst expectations for both revenue and earnings. However, the contrasting results from the two technology giants heightened scrutiny of spending and growth prospects across the sector.

The pressure extended beyond the largest technology companies. Semiconductor stocks declined, while software shares also tumbled. Fortinet and ServiceNow recorded double-digit losses following their respective earnings reports, according to Yahoo Finance.

Investors were also preparing for Amazon's third-quarter earnings report, scheduled for release after Thursday's market close. The results were expected to provide another measure of performance among major cloud computing and technology companies.

Outside the technology sector, Eli Lilly shares rose 6 percent after the pharmaceutical company reported strong third-quarter results for its GLP-1 drugs. The gain contrasted with declines among several other companies that issued earnings reports or business outlooks that disappointed investors.

Caterpillar shares fell as much as 12 percent after the industrial equipment maker delivered a forecast that failed to meet Wall Street's expectations. Grocery chain Sprouts Farmers Market suffered a steeper decline, with its shares plunging 22 percent after the company disclosed a price-cutting strategy expected to weigh on profits into next year.

The broader market decline followed the Federal Reserve's decision on Wednesday to leave interest rates unchanged. Two policymakers dissented, favoring an interest rate increase as inflation remained persistent.

Inflation data added to the economic backdrop confronting investors. The Personal Consumption Expenditures price index, the Federal Reserve's preferred inflation gauge, rose 3.6 percent year over year in September, indicating that price pressures remained elevated.

The combination of persistent inflation, uncertainty over interest rates and questions about the financial returns from AI investment shaped trading as investors evaluated corporate earnings and the outlook for major US companies.