The broad market index fell 0.13% to close at 6,969.01, while the Nasdaq Composite fell 0.72% to end at 23,685.12. The Dow Jones Industrial Average rose by 0.11%, or 55.96 points, and stopped at 49,071.56.
In cryptocurrencies, bitcoin fell more than 5% to hit its lowest level in nearly two months.
Microsoft cut the benchmark with a roughly 10% drop, notching its worst day since March 2020. That’s after the “Magnificent Seven” member reported that cloud growth slowed in the second fiscal quarter, SEEbiz reports. The firm also issued soft operating margin guidance for the fiscal third quarter.
A drop in software firms’ shares contributed to the losses, and investors grew fearful that artificial intelligence would disrupt Microsoft’s business model. Shares of ServiceNow fell about 10% even after better-than-expected results and revenue for the fourth quarter. Shares of Oracle and Salesforce fell 2% and 6%, respectively.
The iShares Expanded Tech-Software Sector ETF ( IGV ) — which tracks the performance of the software sector — fell into bear market territory on Thursday, losing about 5% on the day, putting it nearly 22% below its recent high. The fund’s move also puts it on track for its biggest one-day decline since last April.
“UI has become a double-edged sword here. Contributes to growth and consumption. Contributes to why valuations are what they are,” said Rob Williams, chief investment strategist at Sage Advisory.
“Now there are more questions about her, making it harder for her to consistently bring positive news.”
With Microsoft’s disappointing results, Apple is under pressure to deliver on its earnings results, which are due to be released after the conference closes on Thursday. Williams noted that as it becomes increasingly difficult for large-cap tech firms to spark bullish sentiment in the market unless they post “explosive” numbers, diversification will become key for investors going forward.
