US Stocks Fall as Alphabet, Caterpillar Earnings Disappoint; Hot PCE Inflation Adds Pressure

U.S. stocks opened lower Thursday as disappointing Alphabet and Caterpillar earnings renewed doubts over returns on massive AI spending, while rising inflation added pressure. The Dow fell more than 200 points, or nearly 0.4%; the Nasdaq dropped nearly 1.8%; the S&P 500 slid about 0.6%; and the Philadelphia Semiconductor Index fell nearly 2.3%. Alphabet (GOOGL) tumbled 11% premarket after third-quarter revenue of $127.58 billion missed the LSEG estimate of $128.22 billion, with core search revenue of $63.35 billion also below forecasts and free cash flow negative at $9.07 billion. Caterpillar (CAT) dropped 10% after guiding to only moderate fourth-quarter revenue growth. The September PCE price index rose 3.6% year over year, matching expectations and up from 3.4% prior, while core PCE rose 3.1%. The data followed the Fed's decision Wednesday to hold rates steady on a 10-2 vote, with the 2-year Treasury yield near 4.7% and the 10-year around 5%. Separately, DoorDash (DASH) agreed to acquire Maplebear (CART) at $65 per share, an 11% premium, while Marvell (MRVL) fell 12.8% on reports it is in talks to buy Lumentum (LITE).