Wall Street falls after Alphabet's balance sheet reignites fears about AI spending

The balance sheet of Alphabet, Google's parent company, brought down the company's shares and reignited investors' fears about spending on artificial intelligence. According to InfoMoney, the Nasdaq closed down 1.38%, at 26,184.72 points, while the Dow Jones fell 0.25%, to 52,342.62 points, and the S&P 500 dropped 0.31%, at 7,720.23 points.

Alphabet's shares closed down 12.64%, the biggest percentage drop in the company's history, according to InfoMoney, which cites Dow Jones Newswires. According to the vehicle, the company lost around US$0.5 trillion in market value. Reuters attributes the movement to a weak result in search advertising and increased cash burn with AI spending. Before the closing, Times Brasil recalled that a drop below 9.77% would lead the stock to the worst post-balance sheet reaction since the IPO in 2004.

The damage was concentrated in the company. The technology sector fell 0.88% on the day, and Microsoft, according to Times Brasil, was practically stable. During the trading session, at 11:51 am Brasília, the Nasdaq fell 1.64%, to 26,117.47 points, according to InfoMoney and Reuters.

The macroeconomic scenario also weighed in. The Federal Reserve kept interest rates unchanged in its decision, but the market began to fear a rate hike in December, according to InfoMoney. At the same time, PCE was in line with expectations, and US GDP accelerated in the third quarter.

In Brazil, Ibovespa also operates in the red. At 1:53 pm, the index fell 0.83%, to 169,579.13 points, and was heading for the fourth consecutive drop, according to Times Brasil. The sequence began with a drop of 13.88% in the trading session on October 26, the first after the re-election of Lula (PT). Then came declines of 0.51% on October 27th and 2.68% on October 28th, when the index closed at 171,006.10 points.

What changes for the investor

In the American market, the episode shows that the balance sheet of a single company can pull the Nasdaq down and that the charge on the return on AI spending remains on the radar. Those who follow the index should observe whether this pressure extends to other companies in the sector and how the Fed will position itself on interest rates until December.

In Brazil, the focus is on the fiscal policy of Lula's new term. As Times Brasil highlighted, investors' fears involve the effects of this policy on interest rates, inflation and public debt. As long as these doubts persist, these factors should continue to be closely monitored on the stock market and in the exchange rate.

Automatically translated from Portuguese.