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almost 8% after downbeat profits, 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 increased on Wednesday, as investors began to reject frustrating Alphabet revenues and weighed the prospect of future rate of interest cuts from the U.S. Federal Reserve.

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

AI-related stocks showed signs of healing after being rocked recently following the skyrocketing popularity of an inexpensive Chinese synthetic intelligence model established by startup DeepSeek. Nvidia, which registered among 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 invest more money which ´ s what the AI story has actually been. This is a fairly long cycle story," said Rob Haworth, senior financial 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 earnings - would fall about 7% from the previous quarter.

On the information front, investors are expecting the January nonfarm payrolls report, users.atw.hu expected to be launched on Friday.

U.S. services sector activity all of a sudden slowed in January amidst cooling demand, assisting curb price growth, a report from the Institute for Supply Management revealed on Wednesday.

"There are some concerns that the Fed may require to alleviate quicker, that the economy is slowing, however that ´ s in fact favorable news for the marketplaces since they ´ re trying to find those Fed rate cuts," Haworth said.

The next Federal Open Markets Committee conference remains in March, and while only 16.5% of traders anticipate a rate cut then, a bulk of traders anticipate 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, immigration, policies and other initiatives from U.S. President Donald Trump's administration.

At 2:00 p.m. ET (1900 GMT), the Dow Jones Industrial Average rose 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 real estate 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 examination of the iPhone maker.

Fiserv advanced 7.3% as the payments firm beat estimates for fourth-quarter revenue, helped by strong need in its banking and payments processing unit.

Markets also await developments on the tariffs front after Trump said on Tuesday he remained in no hurry to speak with Chinese President Xi Jinping to attempt to pacify a new trade war between the nations.

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 manufacturer forecast first-quarter profits below quotes.

Johnson Controls leapt 12.5% as the structure services company named 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 published 31 brand-new 52-week highs and 12 new lows while the Nasdaq Composite recorded 100 brand-new highs and 85 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 Nia Williams)