Alphabet's Worst Day Ever Wrecks Nasdaq, but ASX Is Set to Climb

Alphabet just had the kind of day that gets written into market history. The Class A shares of Google's parent company fell 12.6 per cent — their worst session since the stock started trading more than 20 years ago — after the tech giant reported weaker summer growth than analysts were expecting. That single drop was heavy enough to drag the whole US market down with it.

The S&P 500 slipped 23.59 points to close at 7,720.39, its first loss in four days. The Nasdaq composite tumbled 365.13 points, landing at 26,184.72. The Dow Jones Industrial Average gave up 132.54 points, finishing at 52,342.56. Here's the twist: four out of every five stocks inside the S&P 500 actually rose. Alphabet alone was enough to sink the index.

The real story is the AI bill coming due. Alphabet burned through more cash last quarter by a measure called free cash flow, after its spending on property and equipment topped $51 billion. Investors are increasingly nervous that the data-centre and AI-chip arms race won't deliver the profits everyone assumed, made worse by how expensive it's gotten to borrow money to keep buying chips.

Plenty of companies had a great day despite the gloom. KLA Corp., whose equipment helps manufacture semiconductors, climbed 5.5 per cent. Eli Lilly jumped 6.6 per cent, Mastercard rose 4.2 per cent, Merck added 3.8 per cent, and Norwegian Cruise Line steamed 13.4 per cent higher after topping expectations, helped by passengers spending more onboard. DoorDash rose 5.6 per cent after agreeing to buy Instacart in a deal valuing Instacart at $US17 billion.

Down under, the picture looks brighter. ASX futures at 6.59am AEDT pointed to a gain of 32 points, or 0.4 per cent, at the open, after the local market added 0.5 per cent on Thursday. The Australian dollar slipped 0.3 per cent, sitting at US70.34¢.

Over in Europe, the European Central Bank held rates steady, and president Christine Lagarde announced she'll resign in February — nine months before her term was due to end. Asia was mixed, with South Korea's Kospi down 1.2 per cent as Samsung Electronics sank 4.1 per cent despite reporting a profit jump. In bonds, the 10-year Treasury yield eased to 4.94 per cent from 5.05 per cent, helped along by a 0.8 per cent dip in Brent crude to $US110.80 a barrel.