Alphabet's 12.8% Slide Drags U.S. Markets Lower

Alphabet's stock fell 12.8% on Thursday, marking its steepest decline in the company's history of trading on public markets.

The drop occurred after the parent company of Google and YouTube reported summer growth that trailed analyst projections. The company stated that it consumed more cash during the quarter, a metric known as free cash flow. This shift happened after Alphabet spent more than $51 billion on property and equipment. Investors reacted to these figures with concern over the return on massive artificial intelligence investments.

The decline in Alphabet's value weighed heavily on broader market indices. The S&P 500 index dropped 0.6%, heading toward its first losing day in a row. The Nasdaq composite, which holds many technology stocks, fell 1.6%. The Dow Jones Industrial Average lost 269 points, a 0.5% decrease. Without Alphabet's loss, the S&P 500 would have finished the day higher.

Other major companies saw their shares rise as they reported stronger financial results than expected. KLA Corp, a manufacturer of semiconductor equipment, gained 5.1%. Eli Lilly stock climbed 6%, while Mastercard rose 4.4%. Merck shares added 3.6% to their value. DoorDash increased by 4.9% following an announcement that it would acquire Instacart in a deal worth $17 billion. The company also beat forecasts for profit and revenue. Norwegian Cruise Line Holdings jumped 13.8% after customers spent more money on board than the cruise line had predicted.

In the bond market, yields on U.S. Treasuries declined following a series of mixed economic data releases. The yield on the 10-year Treasury note fell to 4.98% from 5.05% late Wednesday. This move followed a period where the yield had topped 5.30% earlier in the month, reaching its highest level since 2002. Oil prices also contributed to the shift in yields, as the price for a barrel of Brent crude dropped 0.8% to $110.80.

Global markets showed varied performance. European indexes rose after the European Central Bank kept interest rates unchanged. Christine Lagarde, the bank's president, announced she will resign in February, nine months before her current term ends. In Asia, stock markets mixed. South Korea's Kospi index fell 1.2%, driven by a 4.1% drop in Samsung Electronics stock despite the company reporting a jump in profits.