Alphabet drops 3% after report that US is mulling Google break-up, drags Wall Street
Alphabet slid and as signs of moderating inflation kept bets alive that the U.S. Federal Reserve would begin its policy easing cycle next month, albeit with a smaller rate cut.
The Google-parent dropped 3.6% after a media report said the U.S. Department of Justice is considering options that include breaking up the online search engine.
Losses in Alphabet weighed on the Nasdaq and pulled the communication services sector down 1.3%, the most among the 11 major S&P 500 sectors.
A rebound in megacap and technology stocks have helped markets recoup most of their losses from a global market rout earlier this month that was partly caused by data showing a surge in U.S. unemployment rate in July.
Latest data showed U.S. consumer prices rose moderately in July and the annual increase in inflation slowed to below 3% for the first time since early 2021.
«There is nothing in here that should prevent the Fed from proceeding with a rate cut in September,» said David Doyle, head of economics at Macquarie.
«The pace of magnitude of easing will depend broadly on incoming data with inflation and employment figures taking on particular importance.»
Money markets now see a 55% chance of a 25-basis point (bps) rate cut at the Fed's Sept. 17-18 meeting, as per the CME FedWatch Tool. Before the data, traders were nearly evenly split between a 25-bps and 50-bps cut.
Both the S&P 500 and the Nasdaq clocked their fourth straight session of gains on Tuesday following softer-than-expected producer prices data that indicated inflation
