Google set to lose $25 billion in market cap after its 'massive shopping spree' spooks investors

AP

Google CEO Sundar Pichai.

• Google dropped 3% in premarket trading after reporting a surprise jump in costs, representing a $25 billion drop in market cap. Facebook, Amazon and Netflix also fell in premarket trading.
• US futures are flat on Tuesday as investors await Trump's State of the Union address. European markets are edging higher with Italy and the UK leading gains.
• US markets closed higher Monday, helped by President Trump's positive words about the US-China trade war and a rally in the Nasdaq.

Google dropped more than 3% in premarket New York trading on Tuesday , signaling a loss in market capitalization of almost $25 billion, after parent company Alphabet reported a staggering 26% increase in costs.

While Google's sales rose 23% in the fourth quarter, payments to partners rose at a faster clip. Meanwhile, losses from its collection of subsidiary businesses, including Waymo and Verily, were the steepest in two years, nearly doubling year over year.

Shares of Facebook, Amazon and Netflix also fell at least 0.2% in premarket trading.

"Following Facebook's better than expected Q4 results, optimism was running high for another set of strong figures from Alphabet," said Jasper Lawler, Head of Research at London Capital Group. "Whilst earnings beat Wall Street's expectations, the firm's massive shopping spree spooked investors."

Elsewhere in markets, stock benchmarks are mixed Tuesday, amid thin Asian trading ahead of a busy week of US events. Here's the roundup:

• US futures are flat as investors await President Donald Trump's State of the Union address, along with the potential for another government shutdown, and amid unresolved trade-war talks.
• Australia was boosted the most in Asia after a special government-appointed inquiry exonerated its much maligned banking sector by leaving its current structure in place despite blasting scandal-ridden financial institutions for misconduct. Australian markets rose 2% while in Japan the Nikkei dropped 0.2%.
• In Europe, The FTSE 100 led the way with gains of 0.8% while Italy's FTSE MIB rose 0.7% as of 9.16 a.m in London (4.16 a.m in New York).
• The Dax, CAC 40, and Euro Stoxx 50 are all up more than 0.5%.
• on Monday, the S&P 500 closed at its highest for two years, and the Nasdaq rallied. The VIX, Wall Street's so-called "fear gauge" of volatility, dropped to 15.6, its lowest level in four months.
• Investor sentiment suggests that the Federal Reserve's hiking plan may be coming to an end, boosting the US dollar and sending oil prices lower.

Here's what's coming up in markets this week:

• Trump is set to deliver his State of the Union address on Tuesday.
• On Wednesday, Federal Reserve Chairman Jerome Powell hosts a town hall meeting.
• The Bank of England is due to report its rate decision and economic forecast on Thursday.
• Twitter is set to report earnings on Thursday.

Get the latest Google stock price here.