Google has agreed to purchase the cloud security startup Wiz for $32 billion, but investors were more focused on economic concerns, causing Alphabet shares to decline by as much as 5%. Worries about a slowdown in the economy have been building up lately, leading to fears of a potential recession.

Investors did not show much enthusiasm for Google's acquisition of Wiz, with shares of Alphabet taking a hit after the deal was made public. This move was seen as Google's strategy to narrow the gap with major cloud competitors like Amazon and Microsoft. However, instead of reacting to the significant deal, investors opted to concentrate on concerns about the economic slowdown.

The ongoing trade war under President Donald Trump has contributed to the unease, as uncertainties surrounding tariffs have clouded predictions for business activities and economic growth. Speculations about a looming recession have grown louder, resulting in a risk-averse sentiment that recently pushed the S&P 500 into correction territory.

The decline in Alphabet's shares was part of a broader sell-off affecting the tech sector, including companies like Tesla and Meta. The Nasdaq Composite, which is tech-heavy, also experienced a 1.8% decline.

Investors are awaiting the Federal Reserve's upcoming policy meeting to gauge the central bank's outlook on the economy. While no interest rate cuts are expected at this meeting, it could become a possibility later if economic stimulus is required.