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nearly 8% after downbeat revenues, heavy AI spend

Indexes: Dow up 0.47%, S&P 500 up 0.19%, Nasdaq down 0.07%

(Updates since mid afternoon)

By Abigail Summerville and Shashwat Chauhan

The S&P 500 and the Dow rose on Wednesday, as financiers started to reject frustrating Alphabet incomes and weighed the prospect of future interest rate cuts from the U.S. Federal Reserve.

Google-parent Alphabet dropped 7.3% after posting downbeat cloud profits development on Tuesday and earmarking a higher-than-expected $75 billion investment for its AI buildout this year.

AI-related stocks showed indications of healing after being rocked last week following the skyrocketing popularity of a low-cost Chinese expert system design established by startup DeepSeek. Nvidia, which signed up one of the biggest losses, was up 3.3% on Wednesday.

"Ultimately, need is not disappearing for AI even with the DeepSeek news. They ´ re all going to need to spend more money which ´ s what the AI story has actually been. This is a fairly long cycle story," said Rob Haworth, senior investment strategist at U.S. Bank Asset Management.

Advanced Micro Devices, on the other hand, lost 8.2% after CEO Lisa Su said the company's current-quarter information center sales - a proxy for its AI profits - would fall about 7% from the previous quarter.

On the information front, investors are looking ahead to the January nonfarm payrolls report, expected to be released on Friday.

U.S. services sector activity unexpectedly slowed in January amid cooling need, helping curb rate growth, a report from the Institute for Supply Management showed on Wednesday.

"There are some concerns that the Fed may require to ease much faster, that the economy is slowing, but that ´ s really positive news for the markets since they ´ re looking for those Fed rate cuts," Haworth said.

The next Federal Open Markets Committee meeting remains in March, and while only 16.5% of traders expect a rate cut then, a majority of traders expect a cut in June, according to CME's FedWatch Tool.

Richmond Fed president Thomas Barkin said the Fed was still leaning towards more rate cuts this year, but flagged uncertainty around the effect of new tariffs, migration, regulations and other efforts from U.S. President Donald Trump's administration.

At 2:00 p.m. ET (1900 GMT), the Dow Jones Industrial Average increased 207.53 points, or 0.47%, to 44,763.57, the S&P 500 gained 11.61 points, or 0.19%, to 6,049.49 and the Nasdaq Composite lost 12.91 points, or 0.07%, to 19,641.11.

Nine of the 11 S&P 500 sectors traded higher, with realty and energy stocks leading the gains while communication services fell over 3%.

Shares of Apple slipped 1.2% as Bloomberg News reported that China's antitrust regulator was preparing for a possible investigation of the iPhone maker.

Fiserv advanced 7.3% as the payments firm beat quotes for fourth-quarter revenue, assisted by strong demand in its banking and payments processing system.

Markets likewise await advancements on the tariffs front after Trump said on Tuesday he remained in no rush to speak to Chinese President Xi Jinping to try to pacify a new trade war between the countries.

The Cboe Volatility Index, called Wall Street's fear gauge, dropped 6.3% to 16.1 today.

In business movers, FMC Corp plunged 32% after the agrichemicals producer projection first-quarter earnings listed below quotes.

Johnson Controls leapt 12.5% as the structure services business called Joakim Weidemanis as ceo and raised its 2025 revenue forecast.

Advancing concerns outnumbered decliners by a 2.62-to-1 ratio on the New York Stock Exchange, and by a 1.88-to-1 ratio on the Nasdaq.

The S&P 500 posted 31 new 52-week highs and 12 brand-new lows while the Nasdaq Composite tape-recorded 100 brand-new highs and 85 brand-new lows.

(Reporting by Abigail Summerville in New York, Shashwat Chauhan and Sukriti Gupta in Bengaluru; Editing by Pooja Desai, Devika Syamnath, Maju Samuel and menwiki.men Nia Williams)