Big drops in tech giants weigh on stocks in the early going

NEW YORK (AP) — Drops in big tech companies including Google’s parent company and Microsoft weighed down the stock market in early trading on Wall Street. Alphabet and Microsoft each fell about 8% in the early going Wednesday after reporting disappointing results. Google’s ad sales slowed dramatically and Microsoft’s profits sank 14% as PC sales fell. The tech-heavy Nasdaq fell 1.7%, while the broader S&P 500 index fell 0.7%. The Dow Jones Industrial Average of 30 major blue chips was barely in the green. Long-term Treasury yields continued to pull back from their multiyear highs. Gains in those rates have sent mortgage rates sharply higher this year.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

Wall Street pointed lower before the opening bell Wednesday after some tepid earnings from major tech companies.

Futures for the tech-heavy Nasdaq composite skidded 1.7% Wednesday. The Dow Jones industrials fell 0.1%, while futures for the benchmark S&P gave up 0.8%.

Microsoft fell about 6% in premarket trading after it reported a double-digit profit decline for the July-September quarter compared to the same time last year.

Alphabet is down close to 6% after it released lackluster results after the bell Tuesday. Google’s parent company said revenue growth has fallen to its slowest pace since the pandemic started as advertisers, fearing a recession, have slashed spending.

Facebook parent Meta reports earnings after the bell Wednesday.

A recent rise in bond prices suggested that some investors expect the Fed to ease off the jumbo rate hikes before the year's end as economic activity cools. Traders see weaker U.S. housing prices and other data as support for a “dial back” of Fed plans at its December meeting, said Vishnu Varathan of Mizuho Bank in a report.

Most economists expect that the Fed will raise its benchmark rate by another 0.75 percentage point for the fourth consecutive time when it meets next week.

At midday in Europe, London's FTSE was 0.5% lower after Britain installed its third prime minister this year amid an economic crisis. Prime Minister Rishi Sunak warned Tuesday of a “profound economic crisis" and U.K. Treasury Chief Jeremy Hunt on Wednesday delayed a statement on the country’s economic affairs until Nov. 17. That gives the new government of Sunak a chance to offer a reset on policies meant to stabilize Britain’s finances after his predecessor’s sweeping tax cuts triggered market upheaval.

The DAX in Frankfurt gained 0.3% and the CAC 40 in Paris dipped 0.2%.

The yield on the 10-year Treasury, or the difference between the market price and the payout at maturity, slipped to 4.07%, while the yield on the two-year Treasury, which tracks Federal Reserve action, fell to 4.44%.

The Fed and other central banks have been raising interest rates to slow economic growth and tamp down persistently high inflation. Investors worry that might tip the global economy into recession.

The U.S. economy contracted during the first half the year. The government will release its first estimate on third-quarter gross domestic product report on Thursday.

In Asia, the Shanghai Composite Index rose 0.8% to 2,999.50 and the Hang Seng in Hong Kong added 1% to 15,317.67.

The Nikkei 225 in Tokyo gained 0.7% to 27,431.84 following news reports the government was preparing to announce a stimulus plan this week that could exceed 20 trillion yen ($140 billion).

The Kospi in Seoul added 0.7% to 2,249.56. Sydney's S&P-ASX 200 rose 0.2% to 6,810.90 after the government reported Australian inflation rose to 7.3% in the three months ending in September.

New Zealand and Southeast Asian markets rose. Indian markets were closed for a holiday.

In energy markets, benchmark U.S. crude gained 93 cents to $86.25 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 74 cents to $85.32 on Tuesday. Brent crude, the price basis for international oil trading, added 63 cents to $92.37 per barrel in London. It gained 26 cents the previous session to $93.52.

The dollar slipped to 146.94 yen from Tuesday's 147.97 yen. The euro advanced to $1.0039 from 99.66 cents.

On Tuesday, the S&P 500 gained 1.6%. The Dow rose 1.1% and the Nasdaq advanced 2.3%.

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McDonald reported from Beijing; Ott from Washington.