Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., September 4, 2025.
Jeenah Moon | Reuters
Stocks were lower Thursday as investors digested a batch of Big Tech earnings, while a meeting between President Donald Trump and Chinese President Xi Jinping concluded.
The Dow Jones Industrial Average shed 131 points, or 0.3%. The S&P 500 dipped 0.6%. The Nasdaq Composite dropped 0.8%.
Megacap tech giants Alphabet, Meta and Microsoft each reported quarterly results after market close Wednesday. Investors are trying to gauge the pace of spending on AI and the returns companies are getting for this investment. While Google parent Alphabet shares popped about 9% on the back of strong results, shares of Meta and Microsoft tumbled about 9% and nearly 2%, respectively. Reactions to the results weighed on the broader market.
Meta recorded its highest revenue growth since the first quarter of 2024, but the social media company said that President Donald Trump’s One Big Beautiful Bill Act led it to incur a one-time charge of $15.93 billion. Meta expects the law will weigh on U.S. federal cash tax payments for the rest of this year and future years. Microsoft shares moved lower after the company said its investment in OpenAI reduced its earnings by $3.1 billion in the quarter. That revelation sparked worries about ongoing AI spending.
Thursday’s losses were mitigated, however, after Trump agreed to cut fentanyl tariffs on China to 10%, while Beijing delayed the latest curb on rare earth exports by a year. “Rare earth issue has been settled,” Trump said.
U.S.-listed rare earth miners rose broadly on the news, with USA Rare Earth gaining 5% and MP Materials advancing 3%.
The U.S. tariff reduction brings the overall levy on Chinese imports to 47% from 57%. As part of the deal, Beijing will “work very hard to stop fentanyl” and buy U.S.-grown soybeans along with other agricultural goods.
To be sure, other areas such as the export of Nvidia chips and the TikTok divestiture. While China’s Ministry of Commerce said that the country is willing to work with the U.S. to “resolve issues related to TikTok,” the ministry didn’t provide any further details on the matter.
Wall Street is coming off a mixed day. The Dow rolled over — ending the day down about 0.2%, or about 74 points — after it briefly touched a record high earlier. The S&P 500 ended the day flat, while the Nasdaq closed up nearly 0.6%.
Those moves came after Federal Reserve Chair Jerome Powell suggested the central bank may not cut interest rates again at its December meeting, which investors had been betting on. “A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it,” he said. The Fed on Wednesday lowered its benchmark overnight borrowing rate by a quarter percentage point to end its two-day policy meeting, putting it in a range of between 3.75% to 4%.
“The interest rate cut was the easy part as markets were giving the Fed breathing room,” said Chris Maxey, chief market strategist at Wealthspire Advisors. “For now, there is appropriate balance between monetary policy and the labor/inflation picture. Powell spooked markets with comments on the lack of conviction on a December rate cut and that’s where we may start to see the slow to respond narrative begin.”
CFRA chief investment strategist Sam Stovall said that the Fed “might be forced to cut more than they indicated wanting to” if tech earnings prove that AI-related productivity is ramping up at a faster pace than anticipated. October has historically been the most volatile month of the year, he noted, adding that any upcoming price uncertainty could ultimately provide traders with an attractive buying opportunity.