Stocks drop after being disappointed by Microsoft
US stocks fell on Wednesday after lackluster expectations from Microsoft (MSFT) and other companies reporting earnings have downplayed the outlook for technology stocks, weighing on the broader market.
S&P 500 Index (^ The Salafist Group for Preaching and Combat(down by 0.8%, while the Dow Jones Industrial Average (^ DJI) fell 185 points, or approximately 0.6%. Nasdaq Technology Heavy Composite (^ ix) rejected 1%.
Investors continued to enter a mild earnings season, with reports from names including Tesla (TSLA), IBM (ibm) and AT&T (t) are all on the waiting list for Wednesday.
Microsoft stock fell 1.4% on Wednesday after the company issued weak earnings forecasts and last-quarter results showed that its cloud business slowed, offsetting the optimism around it. Earnings are better than expected. Its findings come after giant megacap last week laid off nearly 10,000 workers, citing its rush into artificial intelligence.
Other technology names have also come under pressure. amazon (AMZN(Apple shares fell 1.6%, while Apple shares declined (AAPL) shares fell 1.5%.
Separately, Microsoft He was experiencing a global network outage Wednesday morning at its Azure cloud platform, along with offerings including Teams and Outlook.
Elsewhere in the stock moves, Texas Instruments (TXNShares fell 1.1% after the chip maker fell It recorded the worst drop in sales since 2020While revenue decreased to $4.17 billion from $4.53 billion. Other semiconductors also declined following the results.
“As we expected, our results reflect weak demand in all end markets except for automobiles,” CEO Rich Templeton said in the company’s earnings release.
Fox shares (Fox) and News Corp. (NWSA) by 2.5% and 5.6%, respectively, behind media mogul Rupert Murdoch Plans for a proposed merger between Fox News Corp. have been scrapped. The companies separated a decade ago.
Despite Wednesday’s declines and some other pessimistic sessions this year, stocks have been on an upward trajectory in the first few weeks of January. Gains have been particularly concentrated across technology stocks, with the Nasdaq Composite up about 8% so far.
“So far, price action in January 2023 bears an uncanny resemblance to that in July 2022 when risky assets rose and prices fell as investors bought into the idea of a ‘soft landing’ — the notion that slower growth would slow inflation and obviate the need for risky assets,” said Garji Chaudhary, president of iShares Investment Strategy, The Americas at BlackRock in a note: “For more Fed hikes.” “This argument faded and price action reversed as the Fed held steady and continued to raise interest rates by 75 basis points in September.”
She added, “Fast-forward to date, many investors again seem convinced that inflation has been beaten and that slowing growth will not only obviate the need for further increases, but also allow the Federal Reserve to cut interest rates before the end of the year.” . .
Despite messages from Fed policymakers that interest rates will rise above 5%, markets are pricing in a lower final rate as they expect a turn lower to 25 basis points at the next meeting from January 31st to February. 1.
the CME FedWatch toolthe tool that measures investor expectations for US rates and monetary policy, shows that markets have a 98.1% chance of a 0.25% increase next week – down slightly from a high of 99.8% earlier this week.
Alexandra Semenova is a correspondent at Yahoo Finance. Follow her on Twitter @tweet
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