Indexes down: Dow 0.42%, S&amp;P 500 1.1%, Nasdaq 2.11%
Meta gains, Microsoft, Tesla drop after quarterly results
Caterpillar advances on reporting higher Q4 profit
Apple results due after markets close
(Updates with comment, early afternoon prices)
By Pranav Kashyap and Twesha Dikshit
Jan 29 (Reuters) - Wall Street’s main indexes slid to over one-week lows on Thursday, as another wave of hefty AI-related spending announcements by mega-cap tech companies rattled investors.
Microsoft (MSFT.O) slumped 12.2% after the software giant’s cloud revenue failed to impress and stoked fears the hefty outlays behind its OpenAI alliance were not translating into monetization fast enough.
Tesla (TSLA.O) also reversed course, down 2.3%, after the electric-vehicle maker outlined plans to more than double capital expenditures to a record level.
“People have just been throwing money and now they’ve reached a certain level where they’re starting to look under the hood and see what’s really going on,” said Max Wasserman, Co-founder and Senior Portfolio Manager at Miramar Capital.
Also weighing on markets was a drop in software stocks, after SAP’s (SAPG.DE) cautious cloud outlook and ServiceNow’s (NOW.N) post-earnings slide of 10% deepened investor concerns that traditional software firms risk losing ground to rising competition from AI players.
Salesforce (CRM.N) was down 7.2%, while Adobe (ADBE.O) lost 3.9% and cloud security firm Datadog (DDOG.O) fell 8.3%.
At 11:18 a.m. ET, the Dow Jones Industrial Average (.DJI) fell 204.00 points, or 0.42%, to 48,811.60, the S&amp;P 500 (.SPX) lost 78.68 points, or 1.13%, to 6,899.35 and the Nasdaq Composite (.IXIC) lost 502.65 points, or 2.11%, to 23,354.80.
Meta (META.O) bucked the trend, jumping almost 8%, as the social media giant paired an upbeat revenue forecast with a 73% jump in this year’s capex budget.
The so-called “Magnificent Seven” stocks have been at the heart of the U.S. bull market, as investors wager that their hefty AI investments will drive a new phase of earnings growth.
The group is projected to deliver a 21.5% earnings increase in the fourth quarter, compared with a 5.3% gain for the rest of the S&amp;P 500, according to data compiled by LSEG.
But with capital expenditures and AI-related outlays climbing far faster than the revenue they are generating, markets are starting to question whether the payoff from these multibillion-dollar AI bets will arrive quickly enough to justify valuations.
“They’re (investors) starting to wonder what type of growth outlook and what type of real return on capital they’re going to get from this,” Wasserman added.
Apple (AAPL.O) was flat, ahead of its results after markets close.
The energy index (.SPNY) jumped 1.5% on the back of surging oil prices, with Brent crude futures hitting a near six-month high on rising concerns about a possible U.S. military attack on Iran. (O/R)
<h3>EARNINGS CHUG ON</h3>
In other notable earnings, Caterpillar (CAT.N) and Mastercard (MA.N) added 2.8% and 1.6%, respectively, after posting a higher profit for the quarter.
Defense contractor Lockheed Martin (LMT.N) rose 5% after forecasting 2026 earnings above Wall Street expectations.
Southwest Airlines’ (LUV.N) shares advanced 12.9% after the airline forecast a stronger-than-expected annual profit.
Bellwether IBM (IBM.N) jumped 6% after beating estimates in its fourth-quarter earnings.
<h3>FED DECISION AS EXPECTED</h3>
Chair Jerome Powell said on Wednesday the Fed would remain data-dependent, with upside risks to inflation and downside risks to employment diminishing.
Domestic data showed initial jobless claims fell slightly to 209,000 last week.
Among other stock moves, rare-earth miners slid following a report the Trump Administration would step back from critical mineral price floors.
USA Rare Earth (USAR.O) fell 12.7%, MP Materials (MP.N) was down 11%, while Critical Metals (CRML.O) and United States Antimony (UAMY.A) dropped over 15% each.

Meta Q4 Earnings

Wall Street's main indexes fell to over one-week lows, with the Dow down 0.42%, S&P 500 down 1.1%, and Nasdaq down 2.11%. Major tech companies like Microsoft and Tesla saw significant drops due to disappointing earnings and increased capital expenditures. Meta, however, rose nearly 8% after a positive revenue forecast. Concerns over AI-related spending and its impact on future earnings growth weighed on investor sentiment. The energy index rose 1.5% amid surging oil prices, while notable earnings from Caterpillar and IBM boosted their stock prices.

- Wall Street's main indexes dropped to over one-week lows, influenced by disappointing earnings from Microsoft and Tesla, which raised concerns about AI-related investments.  
- Meta saw gains following a positive revenue forecast, while other software stocks suffered amidst cautious outlooks and increased competition from AI firms.  
- The energy index climbed due to rising oil prices, while notable earnings from Caterpillar and IBM provided some market support.

Reuters

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US STOCKS-Wall Street slides to over one-week low as Big Tech's soaring AI budgets trigger flight