Wall Street stumbles after record run as Alphabet slides

Wall Street’s main indexes on Tuesday slipped from all-time highs set in the previous session, after a slump in the shares of Google-parent Alphabet following a revenue miss and a drop in Apple ahead of its results.

The S&P 500 and the Nasdaq broke above record levels on Monday as investors took comfort from a largely positive earnings season, benign inflation data and hints of progress in US-China trade talks.

Alphabet shares tumbled 8.56% and were on track for their worst decline since December 2008, after the company also posted its slowest revenue growth in three years.

The S&P communication services sector slid 3%, the most among the 11 major S&P sectors and was on pace for its biggest%age fall in over four months.

Apple dropped 2.46% ahead of results later in the day, which will wrap up earnings for the high-growth FAANG stocks. Shares of Amazon.com, Facebook and Netflix also slipped between 0.3% and 1.5%.

“People are definitely taking some profits off names like Apple, Google. There could be a little ‘peaking’ mentality here considering how indexes are at record levels, people tend to get a bit cautious,” said Jeremy Bryan, portfolio manager at Gradient Investments in Arden Hills, Minnesota.

“Large-cap companies have generally reported better-than-expected numbers but not the kind that would accelerate a rally.”

Limiting losses on the Dow Jones Industrial Average was Chevron The company’s shares rose 3.49% after Warren Buffett’s Berkshire Hathaway put $10 billion behind Occidental Petroleum’s bid for smaller rival Anadarko Petroleum as it tries to see off competition from Chevron.

In a big day for healthcare, Pfizer Inc climbed 2.40% and Merck & Co Inc rose 1.21% after the drugmakers beat quarterly earnings estimates.

With over half of the S&P 500 companies reporting, analysts now expect a 0.7% rise in first-quarter profits, a stark reversal from a 2% fall estimated at the beginning of the month, according to Refinitiv data.

General Electric jumped 3.49% after the industrial conglomerate’s first-quarter profit rose and it lost less cash than expected.

Mastercard Inc rose 1.58% to a record high after the card company beat estimates for quarterly profit.

At 11:08 am ET, the Dow was down 126.48 points, or 0.48%, at 26,427.91. The S&P 500 was down 18.59 points, or 0.63%, at 2,924.44 and the Nasdaq Composite was down 108.64 points, or 1.33%, at 8,053.22.

Perrigo Co Plc slid 8.8%, the most among S&P 500 companies, after a revised notice from the tax authorities proposed additional liability.

Investors will also pay close attention to the next two rounds of US-China trade negotiations. US Treasury Secretary Steven Mnuchin said he hopes to make “substantial progress” with Chinese negotiators.

The Fed’s two-day meeting starting on Tuesday will also be in focus for hints on the direction of interest rates.

Declining issues outnumbered advancers for a 1.68-to-1 ratio on the NYSE and for a 2.63-to-1 ratio on the Nasdaq.

The S&P index recorded 30 new 52-week highs and no new low, while the Nasdaq recorded 55 new highs and 24 new lows.