NEW YORK (AP) — Google’s parent company and other tech stocks are weighing on a mixed Wall Street Wednesday as the focus swings back toward how much profit businesses are making.The S&P 500 was 0.3% lower in morning trading, though more stocks were rising in the index than falling. The Dow Jones Industrial Average was down 79 points, or 0.2%, as of 10:15 a.m. Eastern time, and the Nasdaq composite was 0.6% lower.Alphabet fell 8.8% even though Google’s parent company reported stronger profit for the latest quarter than analysts expected. Investors focused instead on slowing growth for its cloud business, whose revenue fell short of forecasts. They also homed in on the $75 billion Alphabet is budgeting for investments this year, roughly $15 billion more than analysts expected, as it remains in the rush to develop artificial-intelligence technology.Pressure is growing on Alphabet from Wall Street, and “investors will be asking what new products will be emerging to warrant the higher level of investment,” according to UBS analysts led by Stephen Ju.Advanced Micro Devices fell even more, 10.6%, even though the chip company edged past profit expectations for the latest quarter. It also felt the pain of high expectations: AMD gave a forecasted range for revenue in the first three months of 2025 whose midpoint suggested growth of 30% from a year earlier, but that wasn’t as strong as analysts expected.While analysts called AMD’s results solid, they also asked why CEO Lisa Su did not give more detail about expectations for the performance of its AI offerings specifically.Investors always want companies to deliver bigger profits, but the hopes may be even higher than usual given how much uncertainty hangs over the global economy because of President Donald Trump’s tariffs.After rocking financial markets around the world at the start of this week, worries about a potentially punishing global trade war have eased a bit after Trump gave 30-day reprieves to both Mexico and Canada. That bolstered traders’ hopes that Trump sees tariffs as merely a tool for negotiation, rather than as a long-term policy.Goldman Sachs economist David Mericle says a further extension may happen, but he sees the tariff risk for both countries likely remaining until the end of a review of the United States’ existing trade agreement with the two countries, which could be in the middle of next year.In the meantime, Trump has pressed ahead with tariffs on Chinese goods, and Mericle expects tariffs to hit autos from the European Union, among other potential moves. That could drive a one-time boost to inflation, which could leave a widely followed underlying measure of it at 2.6% in December, above the Federal Reserve’s target of 2%.One of the fears hurting Wall Street is that the upward pressure on inflation could keep the Fed from cutting interest rates this year, after it began doing so in February in order to relax pressure on the economy and give the job market
Mer. Feb 5th, 2025
