FMC plunges 33% on lower quarterly revenue forecast
Alphabet falls nearly 8% after downbeat earnings, heavy AI spend
Indexes: Dow up 0.47%, S&P 500 up 0.19%, Nasdaq down 0.07%
Updates as of mid afternoon
By Abigail Summerville and Shashwat Chauhan
Feb 5 (Reuters) - The S&P 500 and the Dow rose on Wednesday, as investors started to brush off disappointing Alphabet earnings and weighed the prospect of future interest rate cuts from the U.S. Federal Reserve.
Google-parent Alphabet GOOGL.O dropped 7.3% after posting downbeat cloud revenue growth on Tuesday and earmarking a higher-than-expected $75 billion investment for its AI buildout this year.
AI-related stocks showed signs of recovery after being rocked last week following the soaring popularity of a low-cost Chinese artificial intelligence model developed by startup DeepSeek. Nvidia NVDA.O, which registered one of the biggest losses, was up 3.3% on Wednesday.
"Ultimately, demand is not going away for AI even with the DeepSeek news. They’re all going to have to spend more money and that’s what the AI story has been. This is a fairly long cycle story," said Rob Haworth, senior investment strategist at U.S. Bank Asset Management.
Advanced Micro Devices AMD.O, meanwhile, lost 8.2% after CEO Lisa Su said the company's current-quarter data center sales - a proxy for its AI revenue - would fall about 7% from the previous quarter.
On the data front, investors are looking ahead to the January nonfarm payrolls report, expected to be released on Friday.
U.S. services sector activity unexpectedly slowed in January amid cooling demand, helping curb price growth, a report from the Institute for Supply Management showed on Wednesday.
"There are some concerns that the Fed may need to ease faster, that the economy is slowing, but that’s actually positive news for the markets because they’re looking for those Fed rate cuts," Haworth said.
The next Federal Open Markets Committee meeting is in March, and while only 16.5% of traders expect a rate cut then, a majority of traders anticipate a cut in June, according to CME's FedWatch Tool.
Richmond Fed president Thomas Barkin said the Fed was still leaning towards more rate cuts this year, but flagged uncertainty around the impact of new tariffs, immigration, regulations and other initiatives from U.S. President Donald Trump's administration.
At 2:00 p.m. ET (1900 GMT), the Dow Jones Industrial Average .DJI rose 207.53 points, or 0.47%, to 44,763.57, the S&P 500 .SPX gained 11.61 points, or 0.19%, to 6,049.49 and the Nasdaq Composite .IXIC lost 12.91 points, or 0.07%, to 19,641.11.
Nine of the 11 S&P 500 sectors traded higher, with real estate .SPLRCR and utility stocks .SPLRCU leading the gains while communication services .SPLRCL fell over 3%.
Shares of Apple AAPL.O slipped 1.2% as Bloomberg News reported that China's antitrust regulator was preparing for a possible investigation of the iPhone maker.
Uber Technologies UBER.N dropped 7.2% after the ride-hailing company forecast current-quarter bookings below estimates.
Fiserv FI.N advanced 7.3% as the payments firm beat estimates for fourth-quarter profit, helped by strong demand in its banking and payments processing unit.
Markets also await developments on the tariffs front after Trump said on Tuesday he was in no hurry to speak to Chinese President Xi Jinping to try to defuse a new trade war between the countries.
The Cboe Volatility Index .VIX, known as Wall Street's fear gauge, dropped 6.3% to 16.1 today.
In corporate movers, FMC Corp FMC.N plunged 32% after the agrichemicals producer forecast first-quarter revenue below estimates.
Johnson Controls JCI.N jumped 12.5% as the building solutions company named Joakim Weidemanis as chief executive officer and lifted its 2025 profit forecast.
Advancing issues outnumbered decliners by a 2.62-to-1 ratio on the New York Stock Exchange, and by a 1.88-to-1 ratio on the Nasdaq.
The S&P 500 posted 31 new 52-week highs and 12 new lows while the Nasdaq Composite recorded 100 new highs and 85 new lows.
Volatility spiked in US markets for the last month https://reut.rs/4jIn0AF
(Reporting by Abigail Summerville in New York, Shashwat Chauhan and Sukriti Gupta in Bengaluru; Editing by Pooja Desai, Devika Syamnath, Maju Samuel and Nia Williams)
((Shashwat.Chauhan@thomsonreuters.com;))
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.