US Stocks Decline Amid Disappointing Earnings and Trade War Concerns

US stocks opened lower on Wednesday as earnings reports from tech giants Alphabet and AMD fell short of expectations, prompting caution among investors. The escalation of the US-China trade war also weighed on sentiment.

The tech-heavy Nasdaq Composite Index (IXIC) led the decline, falling 0.6%. The benchmark S&P 500 Index (GSPC) shed approximately 0.2%, while the Dow Jones Industrial Average (DJI) remained largely flat after closing higher on Tuesday.

Alphabet's quarterly results missed analysts' estimates, pressuring the company's shares by nearly 8%. Investors expressed concern that the tech giant's heavy investments in artificial intelligence (AI) may not yield significant returns in the near term. AMD's earnings beat expectations, but its disappointing forecast for data center sales sparked worries about a slowdown in AI momentum, sending its stock tumbling over 9%.

The escalating trade tensions between the US and China further dampened market sentiment. Apple's (AAPL) shares dropped roughly 2% after Bloomberg reported that China is investigating its app store in an antitrust probe. President Donald Trump's tariff plans have created uncertainty in financial markets, and his unexpected suggestion to develop the Gaza strip has added another layer of confusion.

Despite the overall market decline, Disney (DIS) emerged as a bright spot. The entertainment giant posted strong earnings driven by its streaming business, despite challenges in its theme park operations.

The ADP National Employment Report, released on Wednesday, showed that private sector employment in the US increased by a modest 178,000 jobs in December, slightly below market expectations. The S&P Global US Services PMI and Composite PMI for January, released later in the day, also came in slightly weaker than anticipated.

Overall, US stocks turned cautious on Wednesday as geopolitical tensions and weak earnings reports overshadowed some positive economic data. Investors remain on alert for further developments in the trade war and the direction of the Federal Reserve's interest rate policy.