KEY POINTS
- Stock market today saw tech stocks retreat after Microsoft reported higher capital spending and slower cloud growth.
- Energy and precious metals climbed as investors reacted to escalating US Iran tensions.
- Markets remain focused on Apple earnings and the Federal Reserve’s policy outlook for 2026.
US stocks fell sharply Thursday as a steep post earnings drop in Microsoft sent technology shares lower, pulling the Nasdaq Composite and S&P 500 into the red amid heightened geopolitical tensions and cautious Federal Reserve policy signals.
The stock market today reflected a decisive shift away from risk as investors reassessed the outlook for megacap technology companies that have powered much of Wall Street’s gains over the past year.
Losses accelerated in mid morning trading, with technology shares under pressure and defensive assets attracting renewed demand.
The Nasdaq Composite fell about 1.8 percent, leading declines among major indexes, while the S&P 500 slid roughly 0.7 percent.
The Dow Jones Industrial Average was down 0.2 percent. The moves followed a muted session Wednesday as traders positioned ahead of earnings from Apple, due after markets close Thursday.
Microsoft shares dropped more than 10 percent after the company reported quarterly results late Wednesday.
While revenue rose, investors focused on a sharper than expected increase in capital expenditures tied to artificial intelligence infrastructure and a slowdown in cloud revenue growth.
Microsoft has been one of the largest beneficiaries of the AI investment cycle, making its guidance closely watched across global markets.
Meta Platforms shares rose more than 7 percent after the company forecast stronger than expected revenue and outlined plans to spend up to $135 billion this year on data center expansion.
Gains in Meta, however, were insufficient to offset broader weakness across the technology sector.
“The market is recalibrating expectations for how quickly AI investments translate into profit growth,” said Daniel Ives, managing director at Wedbush Securities. “Microsoft’s spending outlook underscores that the cost curve is still rising.”
Tesla shares slipped more than 1.5 percent after the electric vehicle maker reported quarterly earnings that beat estimates but showed the company’s first annual revenue decline.
Management emphasized a strategic shift toward robotics and artificial intelligence, adding uncertainty to its near term outlook.
Outside equities, investors reacted to rising geopolitical risk. President Donald Trump warned Iran it must quickly reach a nuclear agreement or face potential military strikes.
Brent crude oil futures climbed above $70 a barrel, extending gains after US naval activity increased in the region. Gold briefly touched a record near $5,500 an ounce as the dollar weakened.
“Energy and gold are responding to risk, not growth,” said Helima Croft, head of global commodity strategy at RBC Capital Markets. “Markets are pricing in the possibility of supply disruptions.”
| Market Indicator | Current Level | Prior Session |
|---|---|---|
| Nasdaq Composite | -1.8% | Flat |
| S&P 500 | -0.7% | Flat |
| Dow Jones | -0.2% | +0.1% |
| Brent Crude | Above $70 | Near $68 |
| Gold | Near $5,500 | Below $5,400 |
“Investors are being forced to balance earnings growth against geopolitical and policy uncertainty,” said Sam Stovall, chief investment strategist at CFRA Research. “That combination tends to pressure high valuation sectors first.”
Mary Ann Bartels, chief investment strategist at Sanctuary Wealth, said the market reaction reflects concern over concentration. “When a few stocks drive performance, any disappointment has an outsized impact.”
Federal Reserve Chair Jerome Powell said Wednesday the central bank kept interest rates unchanged as it evaluates progress on inflation.
Futures markets are pricing in two quarter point cuts by the end of the year, according to CME Group data.
Attention now turns to Apple’s earnings report and any signals on consumer demand and supply chains.
Investors are also watching for an announcement from President Trump on his nominee to succeed Powell when his term ends in May, a decision that could shape monetary policy expectations.
The stock market today underscored the fragility of sentiment tied to megacap technology earnings and global risk.
As investors weigh corporate spending, geopolitical tensions and the path of interest rates, volatility is likely to remain a defining feature of markets in early 2026.
Author’s perspective
In my analysis, the Microsoft led selloff signals a repricing of AI capex risk, not a collapse in demand, as markets question the return profile of spending.
I predict that US megacap tech will pivot toward capital discipline, with cloud providers prioritizing margin optimization over capacity growth as rates normalize. For households and investors, this volatility affects retirement portfolios and savings.
NOTE! This report was compiled from multiple reliable sources, including official statements, press releases, and verified media coverage.
