What moved markets

Stocks slipped as Alphabet's results revived worries about AI spending. The S&P 500 fell 0.30% to 7,720.39, ending a three-day winning streak, the Nasdaq Composite lost 1.38% to 26,184.72 and the Dow fell 132.54 points (0.25%) to 52,342.56. source
Alphabet fell about 12.6%, a historic one-day drop, after its report showed negative free cash flow and a search revenue miss. The selloff spread to chips and software: ServiceNow fell 27%, Fortinet 20% and Marvell 13%, while Caterpillar lost 9% on a forecast that disappointed. source
The Alphabet hit was about cash, not just search: operating cash flow of $42.3 billion against $51.4 billion of capex left free cash flow at negative $9.1 billion for the quarter, and the stock erased roughly $500 billion of market value on the day. source
AI-spending jitters broadened: Alphabet and Microsoft held their capex forecasts while Microsoft's CFO flagged third-party GPU capacity delays into the first half of 2027. Meta (capex guide $135B–$145B) and Alphabet both reported negative free cash flow, and hyperscaler capex is expected to top $1 trillion next year. source
Chips snapped a four-day winning streak as investors separated AI spenders that can fund their plans from those burning cash or borrowing: Micron fell 4.98%, AMD 2.08%, Broadcom 1.94%, TSMC 1.75% and Nvidia 0.80%, while ASML gained 0.77%. source
Under the surface the typical stock rallied: 406 of 501 S&P 500 tickers rose and the median stock gained 1.47%, while the cap-weighted index fell because of its largest names. Consumer cyclicals led (median +2.76%) and technology lagged. Eight of 11 sectors finished higher, led by health care (+2.5%) and real estate (+2.25%), while communication services fell 6.6%. source
Earnings dispersion was extreme: Xerox closed about 40% lower after cutting forecasts, Eli Lilly rose about 6.4% after raising guidance, Caterpillar fell despite beating estimates, and DoorDash closed 5.61% higher after agreeing to acquire Instacart, mostly in cash. source
The economy grew at a 3.4% annual pace in the third quarter, faster than the roughly 3.1% to 3.2% expected and up from 2.2% in the second quarter. September PCE inflation rose 0.5% on the month to 3.6% a year, and core PCE rose 0.3% to 3.1%, both in line with forecasts. source
Treasuries rallied on safe-haven buying despite the hot growth data: the 10-year yield fell 10.6 basis points to 4.939% and the 2-year fell 13.3 basis points to 4.602%. Oil eased on reports of renewed Iran peace efforts, with WTI settling at $102.00 and Brent at $114.88. source
Fed backdrop: a day after the FOMC held at 3.75%–4% in a 10–2 vote (Cook and Hammack wanted a hike, following September's increase), Chair Kevin Warsh gave no clear December steer; CME FedWatch still implied about a 78% chance of at least one more hike by December. source

Research only, not financial advice. Built Oct 29 11:51 PM PT.