Dow, S&P 500, Nasdaq Decline as Microsoft Earnings Shock Investors

Feb 1, 2026, 2:35 AM

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US stocks fell on Thursday, with the tech-heavy Nasdaq Composite leading the decline, shedding approximately 0.7% as Microsoft (MSFT) shares plummeted over 10% following its earnings report. The S&P 500 also faced losses, decreasing by 0.2%, while the Dow Jones Industrial Average managed to turn slightly positive by the day's end.

Microsoft's earnings report raised concerns among investors due to higher-than-expected capital spending and a slowdown in cloud sales growth. This steep decline in Microsoft's stock not only impacted its own market value but also had broader implications for the technology sector, leading to a tech-driven sell-off across the board.

In contrast, Meta Platforms (META) saw its shares rise over 10% after reporting a surprisingly strong quarterly revenue outlook, which highlighted the company's substantial investments in artificial intelligence. Meta's plans to invest up to $135 billion in its data center build-out this year were viewed positively, positioning the company as a strong competitor in the AI race.

Meanwhile, Tesla (TSLA) experienced a decline of over 3%, as the company shifted its focus from electric vehicles to robots, despite posting a quarterly earnings beat. However, Tesla also reported its first-ever annual revenue decline, contributing to investor uncertainty ahead of Apple's (AAPL) earnings report later in the day.

The day's market activity occurred against a backdrop of escalating tensions between the US and Iran, with President Trump's warning to Iran regarding nuclear negotiations potentially influencing investor sentiment. Furthermore, crude oil futures climbed to a four-month high, with prices for Brent crude surging past $70 per barrel, adding to the volatility in the financial markets.

Wall Street is also processing the Federal Reserve's recent monetary policy announcement, which kept interest rates unchanged. Expectations are building for potential rate cuts later this year, but analysts caution that such easing may not materialize until after Jerome Powell's tenure concludes in May.

As the trading day progressed, all eyes were on Apple and other major tech firms as they prepared to report their earnings, with investors hoping for positive surprises to stabilize the market. The performance of these tech giants will be critical in shaping the outlook for the broader market in the coming weeks.

In summary, the tech sector's struggles, particularly due to Microsoft's disappointing earnings, have cast a shadow over US stocks, leading to a cautious approach among investors as they await further developments in corporate earnings and economic conditions.

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