Key facts
- Alphabet missed sales forecasts; cloud growth was 103%, but free cash flow and AI returns worried investors.
- The Nasdaq Composite was down 1.35% as of the report, with the Dow down 0.4% and the S&P 500 down 0.3%.
- Shell's third-quarter profit was the highest since 2022, per AJ Bell's Russ Mould, but the market response was muted.
- Lloyds slipped after results largely in line, with underlying revenue modestly below forecasts and no guidance lift.
- The Federal Reserve held rates on Wednesday, with two dissenters favoring a rise, and September PCE inflation was 3.6% year on year.
- ECB President Christine Lagarde said she will leave on February 7, 2027, months early.
The FTSE 100 ended Thursday's session 27.57 points higher at 10,722.07, off its high point, after trading up 42 points at the open and gaining 47 points by mid-morning, according to The Market Reporter.
Alphabet's third-quarter results revived worries about AI spending. The Google owner missed sales forecasts, and its stock was down almost 16% in early US trading, wiping over half a trillion dollars from its valuation, the report said. The Nasdaq Composite was down 1.35% as of the report, while the Dow Jones Industrial Average fell 0.4% and the S&P 500 lost 0.3%.
Russ Mould, investment director at AJ Bell, said the numbers had magnified concerns about the sustainability of huge AI spending. He said Alphabet showed weakness in its core search advertising business, with signs its chatbot-style AI mode was hurting traditional search. Profit was also hit by movements in the value of investments including SpaceX, and by regulatory fines, although cloud growth was strong at 103%.
Shell's third-quarter profit was the highest since 2022, Mould said, but the market response was muted given recent strength in oil prices. He said a big reduction in global refining capacity was driving record margins, and buybacks offered Shell more flexibility than a higher dividend. Lloyds slipped after results largely in line, with underlying revenue modestly below forecasts and no guidance lift, and the bank warned of a more competitive market for customer deposits.
The Federal Reserve held rates on Wednesday with two dissenters favoring a rise, and the Personal Consumption Expenditures inflation gauge rose 3.6% year on year in September. Christine Lagarde, European Central Bank president, said she will leave on February 7, 2027, months early.