U.S. stocks retreated on Thursday as investors digested Big Tech earnings reports and new developments in U.S.-China trade relations. The S&P 500 slipped 0.5%, pulling further away from its recent record high. The Dow Jones Industrial Average dropped 199 points, while the Nasdaq Composite fell 0.7%, weighed down by disappointing reactions to major technology company earnings.
President Donald Trump praised his long-awaited meeting with Chinese President Xi Jinping, but tensions between the world’s two largest economies continue to unsettle markets. The mix of trade news and uneven corporate performance has left investors uncertain about the strength of the latest rally.
Microsoft, Meta, and Alphabet Highlight Diverging Big Tech Trends
The focus of the day was squarely on Big Tech earnings, where results from some of the most influential companies produced a divided reaction.
Alphabet Inc. (NASDAQ:GOOGL) surged 8.6% after reporting its first-ever quarter with more than $100 billion in revenue and nearly $35 billion in profit, easily surpassing Wall Street expectations. The results reinforced the company’s dominance in digital advertising and cloud computing.
Alphabet’s performance followed a U.S. court ruling in the Justice Department’s monopoly case against Google Search — a decision seen as a mild rebuke that will not significantly hinder the company’s business model.
Meanwhile, Meta Platforms Inc. (NASDAQ:META) dropped more than 9% after posting strong revenue but warning investors of rising costs linked to its ongoing artificial intelligence (AI) expansion. The company expects significantly higher expenses in 2026 as it continues building infrastructure and hiring top AI talent.
Microsoft Corp. (NASDAQ:MSFT) also slipped 2% despite solid earnings. Investors were concerned about the company’s massive capital spending to expand its cloud computing capacity, which has ballooned due to the surge in AI-related demand.
Investors are now waiting for Amazon.com Inc. (NASDAQ:AMZN) and Apple Inc. (NASDAQ:AAPL), which report after the bell, to determine whether the Big Tech earnings trend will remain mixed or turn more optimistic.
Trump-Xi Meeting Fails to Fully Reassure Markets
Beyond Big Tech earnings, geopolitical developments continued to shape investor sentiment. Trump announced a reduction in tariffs on Chinese goods from 57% to 47%, citing progress by Beijing in curbing exports of fentanyl-related chemicals. However, traders remain cautious, as China has not confirmed a finalized deal.
While Trump described his meeting with Xi as “amazing,” experts note that significant disagreements persist on trade, technology, and manufacturing dominance. Both nations are vying for leadership in critical sectors like AI, renewable energy, and semiconductors — areas that have become central to global market dynamics.
The potential easing of trade tensions gave short-lived support to markets in Asia, where Tokyo’s Nikkei 225 closed up slightly, while Hong Kong’s Hang Seng and Shanghai Composite declined. European indexes, including Germany’s DAX and Britain’s FTSE 100, also drifted lower amid investor uncertainty.
Broader Market Reaction and Economic Outlook
Futures trading reflected the caution on Wall Street. S&P 500 futures edged down 0.2%, while Dow futures dropped 0.4% and Nasdaq futures lost 0.2%. Meanwhile, benchmark U.S. crude oil fell 36 cents to $60.12 per barrel, and Brent crude declined to $63.89.
Markets also reacted to remarks from Federal Reserve Chair Jerome Powell, who stated that another interest rate cut in December was “far from a foregone conclusion.” The Fed’s balancing act between supporting the job market and controlling inflation continues to add complexity to market forecasts.
Outlook: Can Big Tech Earnings Sustain Market Momentum?
The current pullback underscores how heavily Wall Street relies on Big Tech earnings to sustain momentum. With Alphabet outperforming but Meta and Microsoft disappointing investors, the sector’s leadership role is being tested.
If Amazon and Apple deliver stronger-than-expected results, optimism could return. But if their earnings echo the mixed signals from peers, investors may brace for more volatility heading into year-end.
For now, Wall Street’s message is clear: strong profits are not enough — in the age of AI spending and global uncertainty, the details behind those profits matter more than ever.
Featured Image: Freepik
