Closing Bell: Tech Stocks Experiencing Negative Reactions Post Earnings

U.S. stocks traded mixed during the session as fallout from Alphabet (GOOGL) earnings and weakness in ServiceNow weighed on the technology and software trades. The tech-heavy Nasdaq-100 (NDX) fell 1.35%, while the PHLX Semiconductor Sector Index (SOX) declined 1.42%. The S&P 500 (SPX) dropped 0.30% and the Dow Jones Industrial Average ($DJI) slipped 0.25%, while the Russell 2000 (RUT) outperformed, climbing 1.01%. The 10-year Treasury yield eased slightly to 4.989%, while the CBOE Volatility Index (VIX) stabilized near 17.2. WTI crude (/CL) edged 0.2% higher to $102.98 at the equity close.

Alphabet Reports Cloud Strength, but Search Miss and Rising Cash Burn Weigh 

Alphabet (GOOGL) missed on the top and bottom lines, with revenue of $127.6B (+25% Y/Y) against a $127.91B estimate and adjusted EPS of $2.67 against $3.02, and shares fell over 12% in the session. Advertising revenue of $82.01B came in about $1.4B short, as management said heavier use of AI Mode, where ad formats are still being tested, slowed search ad growth even though query growth was the strongest in five years. Google Cloud was the bright spot, with revenue more than doubling to $30.71B (+103% Y/Y) on demand for AI infrastructure and a growing contribution from direct TPU System sales.

See Schwab IMPACT 2026: Matt Tuttle Sees GOOGL as a Buy, ORCL Guidance 'Huge'

Microsoft Reports Stronger-Than-Expected Cash Flow, but AI Spending Drives More Debt 

Microsoft (MSFT) beat across the board, with revenue of $92.28B against $90.74B expected, adjusted EPS of $4.89 against $4.73, and Azure revenue of $33.17B (+48% Y/Y), which it disclosed in dollars for the first time. FQ2 guidance was also above consensus, with revenue of $96.0B–$97.1B and Azure growth of 49%–50% in constant currency. Microsoft now expects calendar-2026 capex of about $170B and says it will stay FCF positive in FY2027, and it is also looking to raise about $25B in a ten-part US bond sale. Shares ended lower on the session after the bond issuance announcement early this morning.

See GOOGL, MSFT & FTNT Test Wall Street’s Sky-High Expectations

U.S. Inflation Remains Elevated as PCE Accelerates in September

U.S. inflation remained elevated in September, with headline PCE prices rising 0.5% month over month and 3.6% year over year, both in line with expectations but accelerating from August. Core PCE increased 0.3% on the month and 3.1% from a year ago, also matching forecasts. Underlying price pressures remained firm, with PCE excluding food, energy and housing up 0.3%, while services excluding energy and housing rose 0.4%. Consumer spending increased 0.5%, slightly below forecasts, while personal income rose just 0.2% and the saving rate slipped to 3.8% from 4.0%.

See September PCE's In-Line Climb, Fed's Interest Rate Path & GOOGL Sells

Watch Schwab Network video clips with highlights from this week's Schwab IMPACT conference in Boston, including:

·      Schwab IMPACT 2026: Charles Schwab CEO on AI's Value for Clients & Advisors

·      Schwab IMPACT 2026: $100 Crude's Continuing Fed Pressure

·      Schwab IMPACT 2026: Former MLB Player's Lessons as a Financial Advisor 

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