U.S. stock markets closed lower on Thursday terminating a three-day winning run. Disappointing <a href="https://bitcomme.com/6881-q3-earnings-reveal-a-sharper-profit-squeeze/” title=”6881) Q3 Earnings Reveal A Sharper Profit Squeeze”>earnings results and guidance by AI-powered corporate behemoths significantly dented market participants’ confidence in risky assets like equities. An elevated reading of a key inflation gauge also hurt investors’ sentiment. All three major stock indexes ended in negative territory.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.3% or 132.54 points to close at 52,342.56. However, 23 components of the 30-stock index ended in positive territory, while seven ended in negative territory. The tech-heavy Nasdaq Composite ended at 26,184.72, sliding 1.4% or 365.13 points on weak performance of AI bigwigs.
The S&P 500 shed 0.3% to finish at 7,720.39. However, nine out of 11 sectors of the broad-market index closed in positive territory, while two were in negative territory. The Health Care Select Sector SPDR (XLV) and the Real Estate Select Sector SPDR (XLRE) rallied 2.4% and 2.2%, respectively. On the other hand, the Communication Services Select Sector SPDR (XLC) and the Information Technology Select Sector SPDR declined 1.9% and 1.2%, respectively.
The fear gauge CBOE Volatility Index (VIX) was up 1.7% to 17.20. A total of 17.05 billion shares were traded on Thursday, lower than the last 20-session average of 17.09 billion. Advancers outnumbered decliners by a 1.95-to-1 ratio on the NYSE. On the Nasdaq, a 1.07-to-1 ratio favored advancing issues.
Weak Q3 Earnings Results
Global Internet search engine giant and AI hyperscaler Alphabet Inc. GOOGL reported third-quarter 2026 adjusted earnings of $2.12 per share, missing the Zacks Consensus Estimate by 27.89% and declining 26% year over year. Net revenues, excluding traffic acquisition costs (TAC), increased 27.1% year over year to $111.21 billion, missing the Zacks Consensus Estimate by 0.53%.
Google’s search business revenues of $63.4 billion, fell short of the consensus mark of $64.9 billion, raising concerns that the company’s flagship search engine business may losing ground to AI-chatbot Claude of Anthropic and ChatGPT of OpenAI.
Moreover, Alphabet incurred a negative free cash flow of $9.1 billion, wider than the consensus estimate of a negative $3.5 billion. This is an alarming signal about whether the company will be able to sustain its massive AI-driven capital expenditure in the future.
Fortinet Inc. FTNT reported third-quarter 2026 non-GAAP earnings per share of 91 cents, which beat the Zacks Consensus Estimate by 7.06% and rose 23% year over year. Total revenues of $2.08 billion beat the consensus mark by 0.79% and increased 20.5% year over year.
