Wall Street's three major indexes lost ground on Thursday with the Nasdaq Composite and the S&P 500 leading losses as Meta and Microsoft shares tumbled on worries over surging AI spending, while investors also digested a more hawkish tone from the US Federal Reserve.

Meta shares sank 11.3 percent for their biggest one-day drop in three years after the social media company forecast "notably larger" capital expenses next year, thanks to investments in artificial intelligence.

Microsoft shares ended down 2.9 percent after the software company reported a record capital expenditure of nearly US$35 billion for its fiscal first quarter and warned that spending would rise this year.

In contrast, however, Google-parent Alphabet finished up 2.5 percent as steady growth in advertising and cloud computing powered better-than-expected results.

The results followed the Federal Reserve's delivery on Wednesday of a widely expected quarter-point rate cut but it raised doubts about future policy moves when Chair Jerome Powell said that another cut in December was not a "foregone conclusion."

This had led traders to pare back the odds of another cut in December to about 70 percent, down from more than 90 percent earlier in the week.

"Investors are in a risk-off mood after the market's been on a run. The S&P 500's near a record high but these technology earnings didn't meet the elevated expectations," said Lindsey Bell, chief strategist at 248 Ventures in Charlotte, North Carolina, also pointing to investor worries about the economic data vacuum due to the government shutdown and a more hawkish Fed.

Bell noted that neither Microsoft, Meta nor Alphabet "was able to significantly clarify when we're going to get a return on the AI investments."

However, after closing the regular session down 3 percent, Amazon shares were up 9 percent in late trading as strong demand for its cloud computing services countered weaker growth in its e-commerce business.

Apple shares rose in choppy after-the-bell trading following its report, which showed strong iPhone sales with some supply constraints.

The Dow Jones Industrial Average fell 109 points, or 0.2 percent, to 47,522, the S&P 500 lost 68 points, or 1 percent, to 6,822 and the Nasdaq Composite lost 377 points, or 1.6 percent, to 23,581.

Thursday's pullback followed record highs in the three major indexes during the past four sessions, lifted by optimism around quarterly earnings and expectations for a more accommodative monetary policy stance.

Meanwhile, a widely anticipated trade agreement between President Xi Jinping and US leader Donald Trump appeared to do little to boost stocks on the day.

Trump agreed to roll back some tariffs on Chinese imports in exchange for Beijing resuming soybean purchases, keeping rare earth exports flowing, and cracking down on fentanyl trafficking.

"When you get good news and markets don't react to it that tells you it's probably already discounted," said Jack McIntyre, portfolio manager at Brandywine Global. (Reuters)