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Published: Oct 30, 2026, 4:00 AM
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By Stephen Culp and Shashwat Chauhan
NEW YORK, Oct 29 (Reuters) - US stocks slid on Thursday, with investors reassessing big tech's massive AI spending spree as they digested high-profile earnings and crucial inflation data the day after the Federal Reserve held US interest rates steady.
All three major US equity indexes lost ground, with the tech-laden Nasdaq losing the most in the wake of Alphabet's disappointing quarterly results released late Wednesday.
In contrast, the smallcap Russell 2000 advanced 1.0%.
Semiconductor stocks snapped their four-day winning streak, dropping 1.4% as investors sought to distinguish between companies that can fund their lofty AI ambitions and those that burn through cash and borrow funds to realize their goals.
Alphabet was in the latter camp following its quarterly report released late on Wednesday. The Google parent's revenue miss was compounded by its accelerated AI-related cash burn. Its shares slid 12.6%, dragging the communication services sector down with it.
"A risk-off day like this, with small caps outperforming, is a good sign that thus far the market's interpretation of cracks in the AI story doesn't mean cracks in every corner of the market," said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky. "There's plenty of other places to go with your money outside of the AI trade that have pretty decent prospects."
On Wednesday, Federal Reserve policymakers chose to hold US rates steady, acknowledging that while price pressures remain "elevated," the central bank will decide on its next move as it "accumulates more information."
A raft of economic data released on Thursday answered that call, with a first take on third-quarter GDP that showed the US economy grew at a faster-than-expected pace in the third quarter, while price growth continued to heat up with a war-related oil supply crunch feeding into broader, systemic inflation.
The Dow Jones Industrial Average fell 132.54 points, or 0.25%, to 52,342.56, the S&P 500 lost 23.59 points, or 0.30%, to 7,720.39 and the Nasdaq Composite lost 365.13 points, or 1.37%, to 26,184.72.
Third-quarter earnings season has crossed the halfway point, with 253 of the companies in the S&P 500 having reported. Of those, 81% have beaten analyst expectations, according to the most recent LSEG data.
Analysts now expect aggregate third-quarter S&P 500 earnings growth of 31.0%, year-on-year, per LSEG.
Caterpillar topped quarterly profit estimates but left its growth targets unchanged. The heavy equipment maker's shares tumbled 9.3%.