The stock market experienced a notable decline today as the S&P 500 dropped 1.2%, weighed down primarily by a sharp selloff in tech giants. The Nasdaq Composite fell 2.3%, while the Dow Jones Industrial Average slipped by 213 points, or 0.4%, reflecting investor caution following recent earnings reports and the Federal Reserve’s latest interest rate announcement.
Microsoft shares plunged 11%, marking their worst one-day performance since March 2020. This sharp decline followed the company’s fiscal second-quarter report revealing a slowdown in cloud growth and softened operating margin guidance for the upcoming quarter. The negative sentiment further spread across software stocks amid concerns that advancements in artificial intelligence could threaten established business models in the sector.
Other major software companies also suffered losses despite posting solid earnings. ServiceNow shares retreated 12% even after exceeding revenue expectations for the fourth quarter. Oracle and Salesforce declined by 5% and 8%, respectively, amplifying pressure on the technology sector. The iShares Expanded Tech-Software Sector ETF (IGV), which tracks this industry segment, tumbled 6%, plunging it into bear market territory as it fell 22% below its recent peak.
Investor focus is now shifting to Apple, whose earnings report is expected after today’s market close. Market watchers anticipate that Apple’s results will provide further direction for technology stocks following this volatile session. Positive performances were also noted, with Meta shares rising 7% after the company issued a stronger-than-expected sales forecast for the first quarter.
In the industrial sector, Caterpillar shares gained over 1%, buoyed by fourth-quarter results that surpassed Wall Street expectations. Overall, stocks had been relatively flat prior to the Federal Reserve’s decision to maintain its benchmark interest rate between 3.5% and 3.75%. The Fed highlighted continued solid economic growth and some stabilization in unemployment rates in its post-meeting statement.
Despite the steady interest rate stance, futures markets indicate expectations for two quarter-point rate cuts before the end of next year, according to the CME FedWatch Tool. Sameer Samana, head of global equities at Wells Fargo Investment Institute, noted that the Fed statement met market expectations and emphasized that upcoming earnings and economic data will be critical drivers for future market movement. He also warned of possible volatility linked to midterm elections during the course of the year.
Key Market Data Today:
- S&P 500: Down 1.2%
- Nasdaq Composite: Down 2.3%
- Dow Jones Industrial Average: Down 213 points (-0.4%)
- Microsoft: Down 11%
- ServiceNow: Down 12%
- Oracle: Down 5%
- Salesforce: Down 8%
- Meta: Up 7%
- Caterpillar: Up 1%+
- iShares Expanded Tech-Software Sector ETF (IGV): Down 6%, now in bear market territory
Investors remain cautious as companies continue to report quarterly results while digesting the Federal Reserve’s monetary policy stance. The market’s reaction to ongoing earnings and economic indicators will be critical as traders seek clarity on growth prospects amidst evolving technological disruptions and geopolitical uncertainties.
Read more at: www.cnbc.com
