Alphabet's record drop sinks the Nasdaq while 400 stocks rise underneath

Thursday, October 29 was Alphabet's day, and not in a good way. The stock fell about 12.7%, which posts call its biggest post-earnings drop on record, after search growth slowed and revenue came in light. Software piled on: ServiceNow fell about 27.0% and Fortinet about 20.1%. The Nasdaq proxy lost about 1.4% and the S&P proxy about 0.4%, but the equal-weight S&P rose about 1.2%. That 2.6-point gap between big tech and the average stock is what scores the close Choppy.

It was a rotation, not a rout. Health care led the groups at about +2.4% as Eli Lilly jumped about 6.6%, followed by real estate at about +2.2%, utilities and staples at about +1.5% and financials at about +1.4%. Small caps rose about 1.0%. Communication stocks fell about 1.9% and tech about 1.2%, while the chip ETF slipped about 1.0%. Long Treasuries gained about 0.6%, the vol proxy fell about 2.3% and gold dropped about 1.3%. Crude rose about 0.9%.

Lilly's street-reported adjusted earnings were $7.48 a share against the calendar's $5.38, and it raised its full-year revenue outlook to $91 billion to $92 billion. Mastercard rose about 4.2% after $5.31 against $5.14. After the close, Amazon is down about 6.2% even though cloud sales grew 39%: earnings of $1.89 missed the calendar's $2.01, its fourth-quarter profit outlook was light at the midpoint, and quarterly capital spending of $77.3 billion ran far above the street's $57.5 billion. Intel is down about 18.3% after beating at $0.52 against $0.39 but guiding fourth-quarter revenue to $15 billion to $16 billion, below the $17.05 billion expected.

Research

September PCE inflation rose 0.5% on the month, matching the calendar's forecast, and 3.6% on the year against a 3.7% forecast and 3.4% prior, per a corrected street report. Posts say third-quarter growth was the fastest in a year. Microsoft is preparing at least a $25 billion bond sale, its first since 2017, to help pay for its AI build.

What X is saying

Posts say concerns over the return on AI spending set off a rotation into the rest of the market, with more than 400 S&P 500 stocks rising and Treasuries rallying as a haven. Accounts say Alphabet's search growth slowed to 12% from 17%, and that Amazon slid after hours on higher AI spending while Intel fell on its outlook. These are claims, not confirmed facts.

Insight

The market spent Thursday asking who pays for AI, and it sold the companies writing the biggest checks while buying almost everything else. It was the first session this week where the equal-weight S&P beat the S&P proxy. Amazon's spending jump and Intel's outlook put the chip ETF down about 3% after hours, so Friday's open starts with tech under pressure again. The question for Friday is whether the money that left big tech keeps flowing into the rest of the market.