Stock Market Update

[BRIEFING.COM] Selling has intensified in the Nasdaq Composite, which is down 1.67%, while the Russell 2000 remains up 0.74%. The widening gap continues to show that today’s weakness is concentrated in large technology stocks rather than extending uniformly across the market.

Alphabet (GOOGL 282.81, -42.08, -12.95%) remains a major source of pressure after its earnings miss. Cloud revenue surged, but heavy capital spending produced negative free cash flow, and plans for another significant spending increase next year reinforced concerns about returns on AI investment. Microsoft (MSFT 525.46, -5.54, -1.04%) has also turned lower despite accelerating Azure growth and above-consensus guidance, as planned capital expenditures above $50 billion next quarter and weaker free cash flow draw scrutiny.

Caterpillar (CAT 649.13, -64.24, -9.01%) and Merck (MRK 147.12, +6.19, +4.39%), also Dow components, are traveling different paths following their earnings reports. Caterpillar is sharply lower as an unchanged outlook, expectations for moderate fourth-quarter sales growth, tariff costs, and sequential margin compression overshadow strong earnings growth and a record backlog. Merck is higher after beating earnings and revenue expectations and raising its earnings guidance, supported by strength in its KEYTRUDA family and WINREVAIR.

Amazon (AMZN 244.84, -9.76, -3.83%) reports after the close, with AWS growth, cloud margins, and returns on its roughly $220 billion capital-spending plan in focus. The negative responses to Alphabet and Microsoft earnings have Amazon on the defensive ahead of the report, increasing the importance of cash generation and holiday-quarter guidance alongside AI-driven cloud demand.