US Markets Slide as Microsoft Earnings Shake Tech Stocks, Software Sector Enters Bear Phase
US equity markets closed sharply lower on Thursday as heavy selling in technology stocks, led by Microsoft, overshadowed the Federal Reserve’s latest interest rate decision.
The S&P 500 declined 1.2%, while technology-heavy indices saw deeper losses, with the Nasdaq Composite tumbling 2.3%. The Dow Jones Industrial Average also ended in the red, falling 304 points, or 0.6%.
Microsoft Triggers Broad Market Weakness
Microsoft emerged as the biggest drag on the broader market after its shares plunged 11%, marking the stock’s steepest single-day fall since March 2020. The decline followed the company’s latest earnings report, which revealed a slowdown in cloud revenue growth during its fiscal second quarter.
Adding to investor concerns, Microsoft issued weaker-than-expected guidance on operating margins for the upcoming fiscal third quarter. Given Microsoft’s heavyweight status within major indices, the selloff had an outsized impact on overall market performance.
Software Stocks Face Heavy Selling Pressure
Losses were not limited to Microsoft. A sharp downturn spread across the software space as investors reassessed growth expectations and potential disruptions from artificial intelligence.
ServiceNow shares slid 12%, despite the company posting better-than-expected fourth-quarter earnings and revenue.
Oracle declined roughly 5%
Salesforce dropped nearly 8%
The iShares Expanded Tech-Software Sector ETF (IGV) reflected the growing stress in the sector, falling 6% in a single session. The move pushed the ETF more than 22% below its recent peak, officially placing it in bear market territory and marking its worst daily performance since last year’s tariff-driven selloff.
Focus Shifts to Apple Earnings
With Microsoft’s results rattling confidence in megacap technology stocks, attention has now turned to Apple, which is scheduled to release its earnings after market close. Investors are watching closely to see whether Apple can restore confidence in the sector or add to ongoing volatility.
Bright Spots Amid Market Declines
Despite the broader selloff, a few stocks managed to buck the trend:
Meta Platforms surged 7% after issuing a stronger-than-expected sales forecast for the first quarter, easing concerns around advertising demand.
Caterpillar gained over 1% after reporting fourth-quarter earnings that comfortably exceeded Wall Street expectations.
Fed Decision Fails to Lift Sentiment
Markets entered Thursday’s session following a largely flat trading day. The S&P 500 had briefly crossed the 7,000 level after the Federal Reserve maintained its benchmark interest rate within the 3.5% to 3.75% range.
However, optimism from the Fed decision quickly faded as earnings-driven concerns—particularly around technology and software—took center stage.
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