Nasdaq falls 1.38% as AI spending and inflation worries hit tech stocks

US stocks fell Thursday as investors reassessed big tech AI spending and inflation data, with the Nasdaq Composite leading losses, dropping 1.38% to 26,184.72 following disappointing Alphabet results. The S&P 500 declined 0.30% to 7,720.39, and the Dow Jones Industrial Average fell 0.25% to 52,342.56, while the small-cap Russell 2000 rose, indicating weakness was concentrated in tech. Alphabet shares plunged 13% after missing earnings estimates and reporting negative free cash flow of $9.07 billion, while maintaining capital expenditure guidance of $195–$205 billion. The declines followed the Federal Reserve's decision Wednesday to hold interest rates at 3.75%–4%, citing elevated inflation. September PCE data showed monthly price increases matching expectations, while quarterly GDP growth accelerated. Outside tech, Caterpillar fell 9%, while Eli Lilly, Ford, and Merck gained on strong results.