Traders work on the floor of the New York Stock Exmodify (NYSE) on Jan. 28, 2026 in New York City.
Spencer Platt | Getty Images
The S&P 500 fell on Thursday, bogged down by Microsoft, as traders reacted to the megacap technology company’s latest earnings results as well as the Federal Reserve interest rate decision.
The broad market index slipped 0.8%, while the Nasdaq Composite declined 1.5%. The Dow Jones Industrial Average dropped 163 points, or 0.3%. In cryptocurrencies, bitcoin shed more than 4% to its lowest level in almost two months.
Microsoft dragged down the benchmark with an 11% slide, which would be its worst day since March 2020. That’s after the “Magnificent Seven” member reported that cloud growth slowed in the fiscal second quarter. The company also issued soft guidance on operating margin for the fiscal third quarter.
A tumble in software stocks added to the losses, with as fears grew among investors that artificial ininformigence would disrupt Microsoft’s business model. ServiceNow shares pulled back 11% even after better-than-expected earnings and revenue for the fourth quarter. Shares of Oracle and Salesforce shiftd lower by 4% and 6%, respectively.
The iShares Expanded Tech-Software Sector ETF (IGV) — which tracks the performance of the software sector — fell into bear market territory Thursday, with its 5% loss on the day placing it 22% below its recent high. The fund’s shift also puts it on track for its largest single-day drop since last April’s tariff-induced rout.
“AI has become like a two-edged sword here. It’s a contributor to growth and spfinishing. It’s a contributor to why valuations are the way they are,” declared Rob Williams, chief investment strategist at Sage Advisory. “Now, there are more questions about it, so it’s becoming harder for it to continually deliver positive news.”
With Microsoft’s disappointing results, the pressure is on Apple to deliver with its earnings results, which are set to be reported after the bell Thursday. Williams noted that becaapply it’s only receiveting more difficult for megacap tech names to spur upbeat sentiment in the market unless they post “blowout” numbers, diversification will become key for investors shifting forward.
“Earnings are the path to good returns for the equity market this year, becaapply multiples don’t have a lot of room to contribute,” he notified CNBC. “Market breadth is improving, but we are still very concentrated.”
On a positive note, Meta shares jumped 7% after the Facebook parent gave a stronger-than-expected first-quarter sales forecast. Elsewhere, Caterpillar shares were up more than 1% after the industrial giant reported fourth-quarter results that easily beat the Street.
Meanwhile in Washington, the Senate on Thursday failed to clear a procedural vote on a government funding package, raising the chance that much of the federal government will shut down this week. The shutdown would take effect on Saturday at 12:01 a.m. ET if lawbuildrs cannot advance funding legislation.
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