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Markets This Week: Tech Selloff, Midterms, Jobs
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Why Did Stocks Fall Oct 29? Alphabet Miss
StockCram Editorial4 min readAlphabet's 12% drop and Amazon's heavy spending rattled the AI trade Thursday, while 3.4% GDP growth and 3.6% PCE inflation kept the Fed in focus.
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- •US stocks fell on Thursday, October 29, because Alphabet dropped about 12% and Caterpillar fell more than 9% after earnings, pulling the Nasdaq down 1.38% to 26,184.72 and the S&P 500 down 0.3% to 7,720.39.
- •The economy grew at a 3.4% annual rate in the third quarter, up from 2.2% in the second quarter, while September PCE inflation ran at 3.6% a year.
- •The Fed held rates at 3.75%-4% on October 28 with two dissents, and markets see better than an 80% chance of a hike in December.
- •Amazon fell 4.25% to $243.79 on Thursday and then about 6% more after hours to $228.90 as its quarterly free cash flow turned negative by $33.5 billion.
Deep DiveToday's Market Movers
Alphabet falls about 12% after a weak third quarter and drags the Nasdaq down 1.4%
What Happened
Alphabet, Google's parent company, fell about 12% on Thursday after it missed Wall Street's third-quarter targets. It reported revenue of about $127.58 billion against a forecast of $128.20 billion, and earnings of $2.12 a share against a forecast of $3.02. The Nasdaq Composite fell 1.38% to 26,184.72, the S&P 500 slipped 0.3% to 7,720.39 and ended a three-day winning run, and the Dow lost 132.54 points, or 0.25%, to 52,342.56.
Why It Matters
Alphabet is one of the largest companies in the S&P 500, so a big drop pulls the whole index down. It also raised new worries about how much money is being spent on AI, a debate we cover in Are We in Another AI Bubble? Most S&P 500 sectors still closed higher. Learn more in our stock market glossary.
Market Impact
Equities
Nasdaq Composite -1.38%, S&P 500 -0.3%, Dow -0.25%; Alphabet about -12%
Rates
Little direct effect; yields were driven by economic data
FX
No clear move reported
Commodities
No direct effect
Amazon drops 4.3%, then falls about 6% after hours on a small earnings miss and heavy spending
What Happened
Amazon reported third-quarter revenue of $201.9 billion and earnings of $1.89 a share on Thursday, both slightly below forecasts. Its shares fell 4.25% to $243.79 in regular trading, then slid another 6.11% after hours to $228.90. Operating income rose 61%. Amazon Web Services, its cloud unit, grew 39%. But free cash flow was negative $33.5 billion because spending on equipment hit $77.3 billion in the quarter.
Why It Matters
The results show how much cash the AI build-out is burning, even for a company growing fast. After-hours moves can change by the next open. Amazon's report came after Thursday's close, so Friday trading will be the first full reaction.
Market Impact
Equities
Amazon -4.25% in regular trading to $243.79, then about -6% after hours to $228.90
Rates
No direct effect
FX
No clear move reported
Commodities
No direct effect
Caterpillar sinks more than 9%, its worst day since March 2020
What Happened
Caterpillar, the heavy-equipment maker, fell more than 9% on Thursday, its worst day since March 2020. It fell even though it beat earnings expectations. Because it is a Dow member, the drop weighed on the Dow, which ended down 132.54 points at 52,342.56.
Why It Matters
Caterpillar is a gauge of building and industrial demand. A steep fall on a company that beat earnings shows how sensitive the market is to what companies say about the future. Dow stocks are weighted by share price, so one big mover can shift the index.
Market Impact
Equities
Caterpillar about -9.3% to $647.39; Dow Jones Industrial Average -0.25%
Rates
No direct effect
FX
No clear move reported
Commodities
No direct effect
US economy grew at a 3.4% pace in the third quarter, topping forecasts
What Happened
The Bureau of Economic Analysis said real US gross domestic product grew at a 3.4% annual rate in the third quarter of 2026, up from 2.2% in the second quarter. Investment, consumer spending and government spending drove the gain, while exports fell. On Thursday, the 10-year Treasury yield hovered below 5%, near 4.96%, and the 2-year yield dropped to about 4.63%.
Why It Matters
Faster growth gives the economy room to handle higher interest rates. It also makes it harder for the Fed to ease up on inflation. See our guide to what GDP is.
Market Impact
Equities
Mixed; most S&P 500 sectors rose even as tech fell
Rates
10-year Treasury yield about 4.96%, down more than 8 basis points; 2-year about 4.63%, down more than 10
FX
No clear move reported
Commodities
WTI crude near $101 a barrel, down about 1.4% in morning trading
September PCE inflation hits 3.6% a year as the Fed's favorite gauge stays hot
What Happened
The September PCE price index, the Federal Reserve's preferred inflation gauge, rose 0.49% from August and 3.6% from a year earlier, in line with forecasts. Core PCE, which leaves out food and energy, rose 0.32% on the month against a forecast of 0.30%, and 3.1% on the year. August's monthly gains were 0.32% for the headline and 0.26% for core.
Why It Matters
Inflation is far above the Fed's 2% goal, and energy costs are a big reason. This keeps pressure on the Fed to raise rates again. For background, see what inflation is and how core inflation differs.
Market Impact
Equities
Limited direct effect; tech earnings dominated
Rates
Markets price better than an 80% chance of a December Fed hike
FX
No clear move reported
Commodities
Energy prices drove the headline gain; WTI near $101
Fed holds rates at 3.75%-4% but two officials dissent and a December hike is expected
What Happened
The Federal Reserve voted on Wednesday, October 28, to keep its policy rate in a range of 3.75% to 4%. Two of the 12 voting members dissented. The Fed's statement said inflation remains elevated and that it wanted more information before acting further. Markets had put the chance of a hike this week at under 10%.
Why It Matters
A pause is not the same as the end of rate hikes. Markets now see a rise in December as likely, which affects mortgage, loan and stock valuations. See why stocks can rise when interest rates are high.
Market Impact
Equities
S&P 500 held its gains after the decision
Rates
Policy rate unchanged at 3.75%-4%; 10-year yield near 5%
FX
No clear move reported
Commodities
No direct effect
Historical Perspective
Similar Event
The 2022 tech earnings slump, when Alphabet, Microsoft and Meta all slid after weak results while the Fed was raising rates.
What Happened Then
Tech-heavy indexes fell sharply for several weeks as investors worried about slowing growth and high rates. The Nasdaq later rebounded as inflation eased. The episode shows how earnings and rate worries can compound each other.
What to Watch Next
- →October 30, 8:30 AM ET: Amazon shares react in the first full session after earnings (after-hours close Thursday: $228.90, down from $243.79 regular close)
- →November 6, 8:30 AM ET: US October jobs report (prior: September payrolls +29,000, unemployment rate 4.2%)
- →December 2026: Federal Reserve policy meeting (prior: rates held at 3.75%-4% on October 28)
Analysis Confidence
Conviction Level:★★★★★
Key Uncertainties
Friday's trading session results were not available, so the picture ends with Thursday's close and Amazon's after-hours move. Sources differ slightly on intraday Treasury yield levels. Why the market fell is partly a matter of interpretation, since several factors landed on the same day. Exact dates for the December Fed meeting and the next ISM data were not confirmed.
Sources
- • CNBC (2026-10-29)
- • Benzinga (2026-10-29)
- • Investopedia (via Yahoo Finance) (2026-10-29)
- • U.S. Bureau of Economic Analysis (2026-10-29)
- • Morningstar (2026-10-29)
- • Yahoo Finance (2026-10-29)
- • Investing.com (2026-10-29)
- • Charles Schwab (2026-10-29)
- • CNBC (Fed decision) (2026-10-28)