US stocks fall Wall Street sees both good and bad in Big Tech profits, US-China relations

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NEW YORK (AP) — The U.S. stock market is pulling back from its record heights on Thursday, as Wall Street sifts through mixed developments on everything from the U.S.-China trade war to profits for Big Tech behemoths.

The S&P 500 fell 0.7% and edged further from its all-time high set on Tuesday, even though slightly more stocks climbed in the index than dropped. The Dow Jones Industrial Average was up 6 points, or less than 0.1%, with an hour remaining in trading. The Nasdaq composite sank 1.2% from its record set the day before.

Stock markets elsewhere in the world were mixed, coming off a much anticipated meeting between the leaders of the world’s two largest economies. U.S. President Donald Trump hailed his talk with China’s leader, Xi Jinping, as a “12” on a scale of zero to 10, and Trump said he would cut tariffs on China. But while the talks may offer some stability for the near term, major tensions remain between the two countries.

Plus, stocks had already run to records earlier this week on expectations for potentially big improvements coming out the Trump-Xi talks.

“The result was fine, but fine isn’t good enough given the expectations going in,” said Brian Jacobsen, chief economist at Annex Wealth Management. “The results were more like small gestures instead of a grand bargain.”

Also feeling the burden of high expectations were some of Wall Street’s most influential stocks.

Meta Platforms dropped 11.4%, cutting into what had been a 28.4% jump for the year so far, and was the heaviest weight on the S&P 500. Analysts said investors were likely perturbed by how much Facebook’s parent company said it’s planning to spend in 2026. Companies across the industry have been on an investment spree to build out their artificial-intelligence capabilities, and the concern is whether it will all pay off.

Microsoft sank 3.4% even though it reported stronger profit and revenue for the latest quarter than analysts expected. Analysts pointed to how it also expects to spend more on investments in 2026 than in 2025, while growth for its Azure business may have fallen a bit short of some investors’ expectations.

On the winning side of Big Tech was Alphabet. Shares of Google’s parent company climbed 3.3% after its profit and revenue for the latest quarter easily topped analysts’ expectations.

How such companies do matters incredibly for investors. The trio of Alphabet, Meta and Microsoft alone account for 14.5% of the total value of all the companies in the S&P 500 index, which dictates the movements for many 401(k) accounts. That means movements for them and a handful of other Big Tech companies can easily overshadow what hundreds of other stocks are doing.

Elsewhere on Wall Street, Chipotle Mexican Grill tumbled 17.2% after the restaurant chain pointed to pressures weighing on its customers, particularly younger ones and those who aren't making high incomes. CEO Scott Boatwright said that households making less than $100,000 are dining out less often because of concerns about the economy and inflation.

He pointed specifically to 25- to 35-year-old customers, who are feeling the weight of unemployment, increased student loan repayments and slower growth with respect to inflation, and he said he thinks restaurants across the industry are seeing something similar. Chipotle cut its forecast for an important underlying measure of sales growth this year.

Eli Lilly, meanwhile, rose 4.6% after delivering stronger profit and revenue for the latest quarter than analysts expected. It credited strong growth for its blockbuster Mounjaro and Zepbound drugs for diabetes and obesity, and it raised its full-year forecasts for revenue and profit.

In the bond market, Treasury yields held relatively steady as traders continue to pare expectations that the Federal Reserve will cut its main interest rate in December.

Traders are still betting on it as likely, according to data from CME Group, but no longer as a near certainty. That’s after Fed Chair Jerome Powell admonished markets the day before, saying a December cut “is not a foregone conclusion — far from it.”

The Fed has lowered its main interest rate twice this year in hopes of boosting the slowing job market. But officials have also said they may have to halt cuts if inflation accelerates beyond its still-high level, because lower rates can worsen inflation.

The yield on the 10-year Treasury rose to 4.09% from 4.08% late Wednesday and from 3.99% the day before Powell’s warning.

In stock markets abroad, indexes dipped by 0.5% in France and by less than 0.1% in Germany after the European Central Bank decided not to move its main interest rate.

Tokyo's Nikkei 225 edged up by less than 0.1% after the Bank of Japan likewise held rates steady.

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AP Business Writers Teresa Cerojano and Matt Ott contributed.