Stocks fell on Wednesday after a disappointing first round of tech gains made investors more cautious heading into the second half of the week.
The tech-heavy Nasdaq and S&P 500 were down 1.8% and 0.7%, respectively. The Dow Jones Industrial Average moved around the flat line as Visa shares gave the index a small boost on strong quarterly numbers.
Shares in Google parent Alphabet fell 8.5% after the tech giant missed expectations on its top and bottom lines. Alphabet also reported a decline in ad revenue from YouTube, prompting investors to weigh in on the outlook for other tech companies that rely on ad spending.
Meanwhile, Microsoft declined about 7.6% after the tech giant reported weaker-than-expected cloud revenue in its latest quarterly results, despite beating earnings and revenue estimates. The company also issued current quarter revenue guidance that fell short of expectations.
“I think we have to take a global perspective and recognize that no one is really immune in this market, there’s a slowdown in digital ad spending,” Brenda Vingiello of Sand Hill Global Advisors told “Closing Bell: Overtime” from CNBC.
In other earnings news, Harley-Davidson shares rose 6.7% after the motorcycle maker reported beating expectations before the bell. Meta was also among the companies willing to report.
“Investors were probably a little surprised by the negative guidance that Microsoft is giving,” said Sam Stovall, chief investment strategist at CFRA, although he noted that others such as Coca-Cola and UPS are doing better. “I think investors are feeling a little bit better about larger-cap, top-tier stocks.”
Wednesday’s early performance is a reversal of the past three days of gains in the major indexes. On Tuesday, the Nasdaq ended up 2.2%, while the S&P 500 and Dow rose 1.6% and 1.1%, respectively. Tuesday’s close marked the first time in October that major indexes recovered for three straight days.