Investing.com -- The Nasdaq slumped Wednesday to remain on course for its worst day of losses since February amid pressure from rising Treasury yields and Alphabet-led weakness in tech following disappointing quarterly results in its cloud business.
The Nasdaq fell 2.5%, the S&P 500 fell 1.5%, and the Dow Jones Industrial Average fell 0.3% or 104 points.
Alphabet slump puts big dent in big tech
Alphabet Inc Class A (NASDAQ:GOOGL) fell more than 8% after its better-than-expected quarterly results were overshadowed by slowing growth in its cloud business.
Google cloud revenue rose 22.5% to $8.41 billion, but that missed Wall Street estimates of $8.6 billion, stoking worries that the tech giant is falling further behind in the artificial intelligence race.
Some tech bulls, however, said the selloff was overdone as its cloud makes up about only 11% of revenue.
“Investors are placing too much relative value on the company's cloud segment which accounts for just ~11% of revenue […] versus the core advertising business which accounts for 78% of revenue,” Wedbush said.
Microsoft shines on earnings stage
Microsoft Corporation (NASDAQ:MSFT) rose more than 2% after its better-than-expected fiscal first-quarter results were accompanied by stronger growth in its cloud business Azure.
Azure reported growth of 28%, a a 1-point acceleration from 27% in fourth quarter and was “the star of the show,” UBS said, beating analyst expectations of 26%.
This was “by far the largest-ever sequential Azure revs growth that Microsoft has ever posted in a Sept quarter,” it added.
Treasury yields resume climb higher ahead of Q3 GDP data
Treasury yields resumed their climb after taking a breather in recent session ahead of economic data due Thursday that will likely show the jump in economic growth in Q3.
Ongoing strength of the economy, which threatens to fuel inflation has been highlighted as a key concern by Federal Reserve chairman Jerome Powell that could force the Fed to lift rates again.
A Fed pause on hikes on Nov. 1 is nearly priced it, however, at 98%, according to Investing.com’s Fed Rate Monitor Tool.
Boeing falls on mixed quarterly results
Boeing Co (NYSE:BA) fell more than 2% after the aircraft maker reported a wider than expected loss and cut its annual guidance on 737 Max deliveries amid a manufacturing problem with the aircraft.
Boeing said it now expects to deliver 375 to 400 737 jets this year, down from the earlier estimate of 400 to 450 jets.