A potentially historic drop for Alphabet’s stock drags the US market lower

NEW YORK — A potentially historic drop for Alphabet’s stock is dragging the U.S. market lower Thursday after the company behind Google and YouTube reported weaker growth for the summer than analysts expected. The report underscored worries about whether all its huge investments in artificial-intelligence technology will pay off.

The S&P 500 fell 0.3% and was on track for its first loss in four days, while the Nasdaq composite tumbled 1.2%. Most of the rest of the stocks on Wall Street were rising, though, and the Dow Jones Industrial Average was down a more modest 0.2%, or 104 points, as of 11:15 a.m. Eastern time.

Alphabet is one of the most influential stocks on Wall Street because it’s one of the largest, and its loss of 11.8% had it heading toward its worst day since it began trading more than 20 years ago. It was under pressure to at least meet analysts’ expectations for growth amid concerns about how much it’s spending to invest in AI.

Alphabet said late Wednesday that it burned through more cash during the latest quarter, according to a measure called free cash flow, after its purchases of property and equipment topped $51 billion.

Worries are weighing on the entire AI industry following a frenzy to build data centers and fill them with AI chips. Not only are concerns high that the AI revolution may not produce as much profit and productivity as hoped, future spending on data centers is also under pressure because of how expensive it’s become to borrow money to buy more chips.

If not for Alphabet’s drop, the S&P 500 would have been higher for the day.

Several companies rallied after reporting stronger profits for the summer than analysts expected, including KLA Corp. The company, whose equipment helps make semiconductors, rose 6.7%.

Eli Lilly climbed 6.4%, Mastercard rose 4.7% and Merck added 5.1%.

DoorDash rose 6.6% after saying it agreed to buy Instacart in a deal valuing it at $17 billion. DoorDash also reported stronger profit and revenue for the latest quarter than analysts expected.

Norwegian Cruise Line Holdings steamed 14.1% higher after likewise topping expectations for summertime profit and revenue. It benefited from cruisers spending more money once aboard ships than the company expected, among other things.

Expectations are high for profit growth broadly among U.S. companies. That’s what allowed the S&P 500 to set its record earlier this month despite high interest rates and other worries weighing on the stock market.

In the bond market, Treasury yields eased following several mixed reports on the U.S. economy.

The overall economy’s growth may have accelerated by more during the summer than economists expected thanks to spending by U.S. consumers and businesses investing in AI, according to a preliminary report. But Americans’ growth in incomes was weaker in September than economists expected, while a measure of inflation worsened.

Fewer U.S. workers applied for unemployment benefits last week, meanwhile, which could indicate few layoffs across the country.

Following the jumble of reports, the yield on the 10-year Treasury fell to 4.98% from 5.05% late Wednesday. It’s been generally pulling back since topping 5.30% earlier this month and touching its highest level since 2002.

Helping to pull yields lower on Thursday was a drop in oil prices. The price for a barrel of Brent crude oil sank 2% to $109.42.

In stock markets abroad, indexes rose in Europe after the European Central Bank held interest rates steady on the continent. The bank’s president, Christine Lagarde, also said she will resign in February, nine months before the end of her term.

In Asia, indexes were mixed. South Korea’s Kospi fell 1.2% due to a drop for market heavyweight Samsung Electronics, which sank 4.1% even though it reported a jump in profit.

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AP Business Writer Chan Ho-him contributed to this report.

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An earlier version of this story incorrectly said that DoorDash’s profit and revenue for the latest quarter missed analysts’ expectations. They both topped forecasts.