US STOCKS-S & P 500, Dow Rise As Investors Digest Earnings, Rate Cut

Alphabet falls almost 8% after downbeat earnings, heavy AI invest

Indexes: Dow up 0.47%, S&P 500 up 0.19%, Nasdaq down 0.07%

(Updates since mid afternoon)

By Abigail Summerville and Shashwat Chauhan

The S&P 500 and the Dow increased on Wednesday, as financiers started to brush off frustrating Alphabet incomes and weighed the possibility of future rates of interest cuts from the U.S. Federal Reserve.

Google-parent Alphabet dropped 7.3% after publishing downbeat cloud revenue growth on Tuesday and earmarking a higher-than-expected $75 billion financial investment for its AI buildout this year.

AI-related stocks showed indications of recovery after being rocked last week following the soaring appeal of an affordable Chinese artificial intelligence design by start-up DeepSeek. Nvidia, oke.zone which registered among the biggest losses, was up 3.3% on Wednesday.

"Ultimately, need is not going away for AI even with the DeepSeek news. They ´ re all going to have to invest more money and that ´ s what the AI story has actually been. This is a fairly long cycle story," said Rob Haworth, senior financial investment strategist at U.S. Bank Asset Management.

Advanced Micro Devices, 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 expecting the January nonfarm payrolls report, anticipated to be released on Friday.

U.S. services sector activity all of a sudden slowed in January amidst cooling need, assisting curb price development, 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, however that ´ s in fact favorable news for the markets since they ´ re looking for those Fed rate cuts," Haworth said.

The next Federal Open Markets Committee meeting remains in March, and while just 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, however flagged uncertainty around the impact of brand-new tariffs, migration, policies and other efforts from U.S. President Donald Trump's administration.

At 2:00 p.m. ET (1900 GMT), the Dow Jones Industrial Average rose 207.53 points, or 0.47%, to 44,763.57, the S&P 500 gained 11.61 points, or 0.19%, to 6,049.49 and the Nasdaq Composite lost 12.91 points, or 0.07%, to 19,641.11.

Nine of the 11 S&P 500 sectors traded higher, with realty and energy stocks leading the gains while interaction services fell over 3%.

Shares of Apple slipped 1.2% as Bloomberg News reported that China's antitrust regulator was preparing for a possible examination of the iPhone maker.

Fiserv advanced 7.3% as the payments firm beat estimates for fourth-quarter profit, helped by strong need in its banking and payments processing system.

Markets also await developments on the tariffs front after Trump said on Tuesday he remained in no rush to speak with Chinese President Xi Jinping to try to pacify a new trade war between the nations.

The Cboe Volatility Index, referred to as Wall Street's worry gauge, dropped 6.3% to 16.1 today.

In business movers, FMC Corp plunged 32% after the agrichemicals manufacturer projection first-quarter income below quotes.

Johnson Controls leapt 12.5% as the building solutions business named Joakim Weidemanis as president and online-learning-initiative.org raised its 2025 profit projection.

Advancing issues surpassed 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 published 31 new 52-week highs and 12 new lows while the Nasdaq Composite recorded 100 brand-new highs and 85 new lows.

(Reporting by Abigail Summerville in New York City, Shashwat Chauhan and Sukriti Gupta in Bengaluru; Editing by Pooja Desai, Devika Syamnath, Maju Samuel and Nia Williams)