The S&P 500 closed lower on Thursday, pressured by a sharp decline in Microsoft shares, as investors digested the tech giant’s earnings report alongside the Federal Reserve’s interest rate decision.
The benchmark index slipped 0.13% to finish at 6,969.01. The Nasdaq Composite fell 0.72% to 23,685.12, while the Dow Jones Industrial Average edged higher by 55.96 points, or 0.11%, ending at 49,071.56. In the crypto market, bitcoin dropped more than 5%, touching its lowest level in nearly two months.
Microsoft weighed heavily on the broader market after plunging nearly 10%, marking its worst session since March 2020. The sell-off followed weaker-than-expected cloud growth in the company’s fiscal second quarter, along with cautious guidance on operating margins for the third quarter.
Losses deepened across software stocks as investor concerns grew over the potential impact of artificial intelligence on Microsoft’s long-term business model. ServiceNow declined around 10% despite reporting better-than-expected fourth-quarter earnings and revenue. Oracle and Salesforce also moved lower, falling roughly 2% and 6%, respectively.
The iShares Expanded Tech-Software Sector ETF (IGV), which tracks software stocks, slid about 5% on the day, pushing the fund nearly 22% below its recent peak and into bear market territory. The drop also put the ETF on course for its steepest one-day decline since April of last year.
Following Microsoft’s disappointing results, attention has now shifted to Apple, which is scheduled to report earnings after the market close. Analysts noted that as expectations rise for megacap technology companies, markets may require exceptionally strong results to sustain positive momentum, making diversification increasingly important for investors.
Meanwhile, political uncertainty added to market caution after the U.S. Senate failed to advance a procedural vote on a government funding package. Without progress, a partial federal government shutdown could begin at 12:01 a.m. ET on Saturday.
