Tech Stocks Dip: Microsoft Leads Decline Ahead of Apple's Earnings

Feb 1, 2026, 2:18 AM

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US stocks experienced a decline on Thursday, primarily influenced by a significant drop in shares of Microsoft, which fell over 10% following its earnings report. This downturn led the tech-heavy Nasdaq Composite to lose approximately 0.7%, while the S&P 500 shed 0.2% during the trading session.

Microsoft's disappointing earnings report raised concerns among investors regarding higher-than-expected capital spending and a slowdown in its cloud services growth. This performance overshadowed a strong quarterly revenue outlook from Meta, which saw its shares gain over 10% on the same day. Meta's planned investment of up to $135 billion in its data center build-out further fueled optimism about its future in the AI sector.

Additionally, Tesla's stock faced a decline of more than 3%, as the company shifted focus from electric vehicles to robotics. The electric vehicle manufacturer reported a quarterly earnings beat but noted its first-ever annual revenue decline, contributing to the mixed sentiments among tech stocks as investors awaited Apple's quarterly earnings report later in the day.

Investor sentiment was also influenced by rising tensions between the US and Iran, as President Trump warned of possible military action if Iran did not agree to a nuclear deal quickly. This geopolitical anxiety contributed to fluctuations in crude oil prices, which rose to a four-month high, with Brent crude surpassing $70 per barrel.

Market analysts are digesting the implications of the Federal Reserve's recent monetary policy announcement, which maintained interest rates. While markets are pricing in potential rate cuts by the end of the year, the timing of such moves may hinge on upcoming leadership decisions at the Fed, particularly concerning Trump's next appointee as chair.

As the fourth-quarter earnings season progresses, investors are keenly focused on upcoming reports from major tech companies, including Apple, as well as Alphabet, Amazon, AMD, and Qualcomm. Analysts have noted a positive consensus forming around earnings growth, with expectations for an 11.9% increase in S&P 500 earnings per share for the fourth quarter, marking a continuation of growth trends seen in previous quarters.

Despite the current market volatility, analysts remain cautiously optimistic. The proportion of S&P 500 companies exceeding earnings expectations has been higher than historical averages, although the magnitude of these surprises has been less robust. This earnings season is critical, as major tech firms carry significant weight in market performance, and positive results could help stabilize investor confidence moving forward.

In summary, as the tech sector faces headwinds from earnings reports and broader economic concerns, all eyes are on Apple to see how its results will influence market dynamics in the coming days. The interplay between corporate performance, geopolitical issues, and monetary policy will likely continue to shape the market landscape in the near future.

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