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Indexes: Dow up 0.56%, S&P 500 down 0.38%, Nasdaq down

0.92%

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Alphabet jumps on quarterly earnings beat

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Meta drops after flagging bigger capex

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Microsoft ( MSFT ) reveals massive AI spending, shares down

(Updates on market open)

By Pranav Kashyap and Nikhil Sharma

Oct 30 (Reuters) -

The S&P 500 and the Nasdaq lost ground on Thursday as Meta

Platforms ( META ) and Microsoft ( MSFT ) slid on concerns of surging AI spending,

unnerving investors already worried about the pace of monetary

policy easing from the U.S. Federal Reserve.

Meta

plunged 12.1%, on track for its biggest percentage

drop in three years, after the Instagram-parent forecast

"notably larger" capital expenses next year thanks to

investments in artificial intelligence.

Microsoft ( MSFT ) dipped 2.3% after the tech giant reported

record capital expenditure of nearly $35 billion for its fiscal

first quarter and warned spending would rise this year.

"We're seeing a limitation in the context of CapEx spend

and AI monetization," said Timothy Chubb, chief investment

officer at Girard.

"It was a fairly low bar this quarter and it's going to

be extremely bifurcated. We're interested in getting a better

read on the consumer after the next Mag 7 reports."

In contrast, Google-parent Alphabet jumped 5.5% as

steady growth in the advertising business and cloud computing

powered better-than-expected results.

Attention now turns to results from fellow "Magnificent

Seven" members Apple ( AAPL ) and Amazon ( AMZN ), scheduled to

report results after market close.

U.S. stocks touched record highs on Wednesday after AI

chip designer Nvidia ( NVDA ) became the first publicly listed

company to breach $5 trillion in market capitalization.

Optimism around AI has been a key driver of the bull run

in U.S. stocks this year, with the top technology companies

collectively accounting for 35% of the weight of the S&P 500.

At 10:33 a.m. the Dow Jones Industrial Average

rose 262.26 points, or 0.56%, to 47,894.26, the S&P 500

lost 26.06 points, or 0.38%, to 6,863.74, and the Nasdaq

Composite shed 221.18 points, or 0.92%, to 23,737.30.

At least five of the 11 S&P 500 sectors traded in the

red, with information technology weighing heavily,

down 1.2%.

The Federal Reserve delivered a widely expected

quarter-point rate cut on Wednesday, but also raised doubts over

future policy action by saying another cut in December was not a

"foregone conclusion".

Traders quickly pared back odds on another similar-sized

reduction in December to about 70%, down from roughly 90%

earlier in the week.

Meanwhile, a freshly announced trade agreement between U.S.

President Donald Trump and China's Xi Jinping did little to

improve overall sentiment.

Trump agreed to roll back some tariffs on Chinese imports in

exchange for Beijing resuming soybean purchases, keeping rare

earth exports flowing and cracking down on fentanyl trafficking.

In other stocks, Merck & Co ( MRK ) slipped 1.2% despite

posting higher third-quarter revenue, while drug distributor

Cardinal Health ( CAH ) climbed 16.7% after raising its annual

adjusted profit forecast.

Of the 222 companies in the S&P 500 that have reported so

far, 84.2% posted earnings above estimates, according to LSEG

data as of Wednesday. That is above the 77% average of the last

four quarters.

Chipotle Mexican Grill ( CMG ) tumbled more than 17% after

the burrito chain axed its annual sales forecast, with tariffs

and inflation squeezing margins.

Declining issues outnumbered advancers by a 1.2-to-1 ratio

on the NYSE, with 82 new highs and 113 new lows.

Declining issues outnumbered advancers by a 1.34-to-1

ratio on the Nasdaq, with 1,824 stocks rising and 2,445 down.

The S&P 500 posted 29 new 52-week highs and 28 new lows,

while the Nasdaq Composite recorded 59 new highs and 126 new

lows.