US stocks cut losses as Alphabet surges overshadows weaker GDP data
U.S. stocks cut early-day losses Wednesday, as a rally in Alphabet helped offset weakness in the broader tech sector following a slump in chip stocks.
At 12:58 ET (16:58 GMT), the Dow Jones Industrial Average rose 115 points, or 0.3%, the S&P 500 gained 0.2%, and the NASDAQ Composite added 0.2%. Alphabet rises on strong earnings
Alphabet (NASDAQ:GOOGL ) stock surged nearly 5% after the Google parent reported stronger-than-expected earnings for the September quarter, while stating that its artificial intelligence investments were now bearing fruit.
Its cloud business - which is closely linked to AI - grew at its fastest pace in eight quarters, while election-related spending also boosted advertisement sales, especially on YouTube.
Strong earnings from Alphabet set a positive tone for upcoming earnings from its tech peers, which are due in the coming days.
Meta Platforms (NASDAQ:META ) and Microsoft (NASDAQ:MSFT ) are set to report after the close Wednesday, followed by Amazon (NASDAQ:AMZN ) and Apple (NASDAQ:AAPL ) on Thursday.
But the broader tech sector was under pressure as Advanced Micro Devices Inc (NASDAQ:AMD ) slumped 9% on underwhelming guidance offset better-than-expected quarterly results.
In the near-term, AMD may stay a "bit range bound because we worry that 2025 will be more of a 'transition' year for the AI story..." UBS said in a recent note.
Super Micro Computer Inc (NASDAQ:SMCI ) also weighed on the chip sector falling more than 30% pressuring the broader chip sector after its auditor EY resigned citing concerns about the board's independence and accounting practices. US Q3 GDP falls short of estimates
Data released earlier Wednesday showed that the US economy grew at a slower than expected rate in the third quarter, with gross domestic product in the world's largest economy rising by 2.8% in the July-September period.
Economists had predicted the figure would match the second quarter's pace of 3.0%.
"Real GDP growth remains strong, and this summer’s fears of an imminent recession now seem grossly exaggerated," Desjardins said in a note, keeping its forecast for a 25 basis point Federal Reserve interest rate cut next month.
Additionally, ADP private sector employment grew by 233,000, an increase from the revised 159,000 last month, a precursor of Friday's widely-watched nonfarm payrolls data.
These readings are likely to factor into the outlook for interest rates, and come before a Fed meeting next week where the central bank is widely expected to cut rates by a smaller 25 basis points.
Volatility in stock markets is also expected to pick up in anticipation of the 2024 presidential election, with voting set for November 5. Donald Trump and Kamala Harris are set for a tight race, although recent polls and prediction markets showed Trump gaining some ground. Humana shines, Heinz stumbles on earnings stage; Eli Lilly slumps on earnings miss
Elsewhere, Humana (NYSE:HUM ) stock rose over 3% after the health insurer beat estimates for third-quarter profit, buoyed by strength in its government-backed Medicare Advantage insurance business for older adults.
Kraft Heinz (NASDAQ:KHC ) stock fell over 4% after the consumer goods company posted a steeper-than-expected fall in quarterly revenue as demand stayed weak for its branded meal kits and snacks.
Eli Lilly (NYSE:LLY ) stock slumped over 12% after the drugmaker missed estimates for third-quarter profit, even as demand for its weight-loss drug soared, hurt by higher manufacturing and acquisition-related costs.
(Peter Nurse, Ambar Warrick contributed to this article.)
Source: Investing.com
