S&P 500 falls, Nasdaq drops as Microsoft crashes 10% after earnings, but the Dow Jones rose – why US stock market ended mixed today

S&P 500, Nasdaq, Dow Jones today: US stocks ended Thursday’s session mixed as investors digested disappointing earnings from Microsoft alongside the Federal Reserve’s latest interest rate decision, while weakness across software stocks weighed heavily on tech-heavy indexes.

US stock market today: S&P 500 dips, Nasdaq slides while Dow Jones posts modest gains

The S&P 500 slipped 0.13% to close at 6,969.01, and the Nasdaq Composite fell 0.72% to 23,685.12, the Dow Jones Industrial Average bucked the trend, rising 55.96 points, or 0.11%, to finish at 49,071.56, as per a CNBC report.

Microsoft stock plunged 10%, marking worst day since March 2020

Microsoft was the biggest drag on the broader market, tumbling about 10% in its worst single-day decline since March 2020. The sell-off followed the software giant’s earnings report, which showed slowing cloud growth in its fiscal second quarter and softer-than-expected guidance for operating margins in the current quarter.


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Tech stocks sink as AI concerns weigh on investor sentiment

Losses spread across the software sector as investor concerns grew that artificial intelligence could begin to disrupt Microsoft’s business model. Shares of ServiceNow fell roughly 10% despite the company reporting better-than-expected fourth-quarter earnings and revenue. Oracle slid about 2%, while Salesforce dropped nearly 6%.

Tech-software ETF IGV enters bear market territory

The sell-off pushed the iShares Expanded Tech-Software Sector ETF (IGV) into bear market territory. The fund fell around 5% on the day and now sits nearly 22% below its recent high, putting it on track for its largest single-day drop since last April.

Wall Street weighs AI risks as growth and valuations face scrutiny

Rob Williams, chief investment strategist at Sage Advisory, said that, “AI has become like a two-edged sword here. It’s a contributor to growth and spending. It’s a contributor to why valuations are the way they are,” adding, “Now, there are more questions about it, so it’s becoming harder for it to continually deliver positive news," as quoted by CNBC.

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Apple earnings take spotlight after Microsoft disappointment

With Microsoft’s results disappointing investors, attention turned to Apple, which reported earnings after the market closed. Williams noted that it is becoming increasingly difficult for megacap tech stocks to lift overall market sentiment unless they deliver standout results, making diversification more important for investors, as per the CNBC report.

He said, “Earnings are the path to good returns for the equity market this year, because multiples don’t have a lot of room to contribute,” adding, "Market breadth is improving, but we are still very concentrated," as quoted by CNBC.

Stocks which gained today

However, not all corporate news was negative. Meta Platforms surged more than 10% after issuing a stronger-than-expected first-quarter sales forecast, while Caterpillar climbed over 3% after reporting fourth-quarter results that easily topped Wall Street expectations.

Government shutdown risk adds political uncertainty to markets

Meanwhile, political uncertainty added another layer of risk. In Washington, the Senate failed to advance a procedural vote on a government funding package, raising the possibility of a partial federal government shutdown. If lawmakers fail to pass funding legislation, a shutdown would take effect at 12:01 a.m. ET on Saturday, as per the CNBC report.

FAQs

Why did US stocks end mixed on Thursday?
Markets reacted to weak Microsoft earnings, the Federal Reserve’s rate decision, and broader losses in software stocks.

How did the S&P 500 perform?
The S&P 500 slipped 0.13% to close at 6,969.01.