Traders navigate the bustling floor of the New York Stock Exchange (NYSE) in New York City, U.S., on January 28, 2026.
The S&P 500 index suffered a setback on Thursday, primarily influenced by a significant decline in Microsoft shares. Traders reacted decisively to the technology colossus’s latest earnings and the Federal Reserve’s recent interest rate pronouncement.
The overall market index diminished by 0.7%, while the Nasdaq Composite endured a steeper fall of 1.6%. Conversely, the Dow Jones Industrial Average experienced a minor decrease of 21 points, equating to 0.1%. In the cryptocurrency sector, a decline of over 4% marked its lowest point in nearly two months.
Microsoft’s performance proved particularly detrimental, plummeting 11%—its most severe drop since March 2020—following revelations of a deceleration in cloud revenue growth for the fiscal second quarter. Additionally, the company provided cautious guidance regarding operating margins for the forthcoming fiscal third quarter.
A downturn among software equities further exacerbated the losses as apprehensions mounted among investors regarding potential disruptions to Microsoft’s business model stemming from advancements in artificial intelligence.
Shares of ServiceNow retreated 12% despite surpassing expectations in earnings and revenue for the fourth quarter. Notable declines were observed in Oracle and Salesforce, which fell by 5% and 8%, respectively.
The iShares Expanded Tech-Software Sector ETF (IGV) — an indicator of software industry performance — succumbed to bear market conditions on Thursday, with a 6% drop pushing it 22% below its recent peak. This marked its most considerable single-day decline since the tariff-induced downturn witnessed last April.
“AI has become a double-edged sword. It contributes to both growth and spending as well as inflated valuations,” noted Rob Williams, Chief Investment Strategist at Sage Advisory. “However, emerging uncertainties are complicating its ability to consistently generate positive outcomes.”
Following Microsoft’s disappointing results, scrutiny turns to Apple, whose earnings are anticipated post-market close on Thursday.
Williams highlighted that, with prevailing challenges for major tech entities to instigate favorable market sentiment without delivering “blowout” figures, diversification is paramount for investors moving forward.
“Earnings are crucial for achieving favorable returns in the equity market this year, as valuation multiples show limited capacity for growth,” he remarked. “Although market breadth is on an upward trajectory, it remains overly concentrated.”
In a silver lining, Meta’s shares surged 7% after the Facebook parent company issued a robust first-quarter sales forecast. Additionally, Caterpillar stock rose by over 1% following the company’s impressive fourth-quarter results, significantly exceeding analysts’ expectations.
Source link: Cnbc.com.
