Investing.com-- U.S. stock index futures fell on Wednesday evening, pressured chiefly by a sharp drop in Google owner Alphabet after its third-quarter earnings missed expectations.
Alphabet's drop largely overshadowed gains in Microsoft after its quarterly earnings beat expectations. Markets were also parsing comments from the Federal Reserve that could herald more interest rate hikes in the coming months.
Nasdaq 100 Futures slid 1.2% to 29,619.50 points by 19:39 ET (23:39 GMT). S&P 500 Futures fell 0.5% to 7,743.25 points, and Dow Jones Futures fell 0.06% to 52,663.0 points.
Futures fell after a mildly positive session on Wall Street, where blowout third-quarter earnings from memory chip giant SK Hynix (NASDAQ:SKHY) helped spur some gains in tech.
Alphabets slides nearly 10%, Microsoft rises on qtrly earnings
Alphabet Inc (NASDAQ:GOOGL) was among the worst aftermarket performers, losing 9.8% after its third-quarter profit missed expectations by a wide margin.
While its revenue just edged past expectations on growing returns from its cloud unit, overall profitability was impacted by continued, outsized spending on artificial intelligence and data center infrastructure.
The earnings release added to growing Wall Street concerns over whether the billions of dollars poured into AI in recent years will be able to generate adequate returns– a notion that battered tech stocks since late-September.
Investors also largely looked past Google's unveiling of a new AI model– Gemini 4 Carbon.
On the other hand, Microsoft Corporation (NASDAQ:MSFT) rose 2.7% in aftermarket trade after it delivered a top and bottom-line beat in its fiscal first-quarter earnings.
Microsoft's Azure unit grew more than expected in the quarter, indicating that the tech giant was progressing well in its efforts to monetize AI.
Alphabet and Microsoft are among the largest spenders on AI infrastructure– a group dubbed as Wall Street's "hyperscalers," with their earnings offering the most insight into the AI trade and returns from the fast-growing technology.
Amazon.com Inc (NASDAQ:AMZN), another hyperscaler, is set to report September quarter earnings on Thursday.
Fed leaves rates on hold, Warsh offers few direct cues
Wall Street ended slightly higher on Wednesday after the Fed left interest rates unchanged at 4.0% as widely expected, with two of the 12-member Federal Open Market Committee calling for a 25 basis point hike.
Fed Chair Kevin Warsh, speaking after the meeting, highlighted recent strength in the economy, but declined to provide any forward guidance on interest rates.
Still, he reiterated the central bank's commitment to its 2% annual inflation target. The Fed had raised rates by 25 basis points in September, as it moved to cool increasingly sticky inflation.
Warsh's comments on the economy– where he highlighted resilient spending and stable employment– were largely interpreted as hawkish, with Treasury yields rising sharply on his comments.
The 10-year yield rose back above 5% after Warsh's address, although it did trim some gains in evening trade.
Markets were also seen ratcheting up bets on a 25 bps hike by the Fed in December, with CME Fedwatch indicating a 83.5% chance for a hike– up from 72.8% a day earlier.
Focus now turns to upcoming third-quarter gross domestic product data and PCE price index data for September– both of which are likely to factor into the Fed's plans for interest rates.
Core PCE data is the Fed's preferred inflation gauge, and is expected to have remained well above the central bank's 2% annual target in September.
Original Article
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