In mid-morning trading on Thursday, U.S. stocks faced a significant downturn primarily driven by a selloff in the technology sector as investors reacted to recent earnings reports from major tech companies. The tech-heavy Nasdaq Composite saw the steepest decline, dropping approximately 1.8%, dragged down by Microsoft, whose shares plummeted over 10% following disappointing results amid soaring capital expenditures and slowing cloud sales growth. The broader market, represented by the S&P 500 and the Dow Jones Industrial Average, also recorded losses of 0.7% and 0.2%, respectively.
Microsoft’s fall contributed to muted investor sentiment across the tech landscape, overshadowing positive earnings from other tech giants like Meta. Meta’s shares climbed more than 7%, fueled by a surprisingly robust revenue outlook amid plans for significant investment in AI infrastructure, earmarking up to $135 billion for data center development this year.
Tesla also struggled, with shares down over 1.5% as the company shifted its focus from electric vehicles to robotics and reported its first-ever annual revenue decline. Investors are now keenly anticipating Apple’s quarterly report, set to be released after the market closes, with particular interest in the sales performance of the iPhone 17 and the Services segment.
Geopolitical tensions added to the market’s volatility, as President Trump issued stern warnings to Iran regarding its nuclear negotiations, leading to heightened fears of military action. This escalation contributed to a significant spike in oil prices, with Brent crude trading above $70 a barrel and U.S. crude futures surpassing $65, marking a continuation of a recent price surge rooted in geopolitical concerns. Gold prices also experienced gains, momentarily exceeding $5,500 an ounce, driven by a weakening dollar and the search for safe-haven assets.
Compounding these dynamics, analysts are closely monitoring the Federal Reserve’s recent decision to maintain interest rates, with expectations for potential rate cuts by the end of the year. Attention is now on who President Trump will nominate as the next Fed chair, a decision he has indicated will come soon.
The macroeconomic landscape is further complicated by the latest jobless claims data, which showed a slight decrease to 209,000, with continuing claims also falling. These figures are viewed in light of commentary from Fed Chair Jerome Powell, who suggested stabilization in the labor market despite slight fluctuations.
The tech sector’s woes were reflected in broader market trends as shares of software services companies saw declines following disappointing earnings from global giant SAP, which spooked investors with a weaker sales outlook and noted delays in securing significant contracts. Prominent firms like ServiceNow, Salesforce, and Workday saw their stock prices drop sharply, reigniting concerns over the potential impact of AI on traditional software services.
Despite the overall market downturn, Caterpillar reported mixed results, with strong earnings driven primarily by sales in its power and energy segment, capitalizing on the AI data center boom despite expectations of tariff impacts in the future.
Comcast’s broadband business also took a hit, shedding customers amid increasing wireless competition, leading to a shortfall against analyst forecasts.
Amidst these developments, the market remains poised for incoming earnings reports and economic data as investors weigh the implications of rising geopolitical tensions alongside evolving tech sector dynamics.
