Alphabet Sinks 11.8%, Small Caps Rally on Strong GDP Growth: Stock Market Today
Key takeaways
- Alphabet’s earnings miss and hefty capital spend triggered a record‑low day for the company, while solid GDP growth lifted small caps and broadened market breadth.
- Alphabet $2.12 vs $3.02 consensus
EPS
Earnings per share — profit for one share of the company, in dollars.
- Capital spending $51.4 billion
- Free cash flow negative Q3
What happened
Alphabet Inc. (GOOGL) fell 11.8% after reporting a third‑quarter earnings miss, dragging the Nasdaq 100 down 1%. Small‑cap stocks and most other indices rose, with the Russell 2000 up 1.2%. Gross domestic product grew at a 3.4% annualized pace in Q3, above expectations, supporting the small‑cap rally.
Why it matters
Alphabet’s slide erased roughly $470 billion of market value and highlighted concerns over its capital spending and negative free cash flow. The strong GDP reading reinforced a shift toward growth‑oriented stocks, boosting the Russell 2000 and widening market breadth.
Short-term and longer-term
Short-term. For the next day or two, watch how the Nasdaq 100 reacts to Alphabet’s slide—if the tech drag continues, the index could stay below 29,500.
Longer-term. Over the coming months, the Alphabet earnings miss and high capital spend may prompt a reevaluation of its valuation and growth prospects.
Words on this card
- Capital spending
- Money a company spends on new equipment, facilities, or technology
- Free cash flow
- Cash generated by a company after covering operating expenses and capital investments
- Gross domestic product (GDP)
- Total value of all goods and services produced in an economy
- Core personal consumption expenditures (PCE)
- A measure of inflation that excludes food and energy prices
- 10‑year Treasury yield
- Interest rate paid on U.S. government bonds with a ten‑year maturity
- Earnings Learn
- A company’s results report — usually profit and sales for a quarter, plus any update on what comes next.