S&P 500 falls, Nasdaq drops as Microsoft crashes 10% after earnings, but the Dow Jones rose – why US stock market ended mixed today

Market Overview - US stocks ended Thursday's session mixed, with the S&P 500 slipping 0.13% to close at 6,969.01, the Nasdaq Composite falling 0.72% to 23,685.12, while the Dow Jones Industrial Average rose 55.96 points, or 0.11%, to finish at 49,071.56 [2][12] Company Performance - Microsoft stock plunged about 10%, marking its worst single-day decline since March 2020, following disappointing earnings that revealed slowing cloud growth and softer-than-expected guidance for operating margins [3][14] - The sell-off in Microsoft led to broader losses across the software sector, with ServiceNow shares falling roughly 10%, Oracle sliding about 2%, and Salesforce dropping nearly 6% [4][14] - Meta Platforms surged more than 10% after issuing a stronger-than-expected first-quarter sales forecast, while Caterpillar climbed over 3% after reporting fourth-quarter results that exceeded Wall Street expectations [10][14] Sector Analysis - The iShares Expanded Tech-Software Sector ETF (IGV) fell around 5% on the day, entering bear market territory and sitting nearly 22% below its recent high, marking its largest single-day drop since last April [6][14] - Concerns regarding artificial intelligence disrupting business models have weighed heavily on investor sentiment, as noted by Rob Williams, chief investment strategist at Sage Advisory, who described AI as a "two-edged sword" affecting growth and valuations [7][14] Future Outlook - Attention has shifted to Apple, which reported earnings after the market closed, as it becomes increasingly difficult for megacap tech stocks to boost overall market sentiment without standout results [8][14] - Williams emphasized that earnings will be crucial for good returns in the equity market this year, as multiples have limited room for contribution, indicating a need for diversification among investors [9][14] Political Context - Political uncertainty arose as the Senate failed to advance a procedural vote on a government funding package, raising the risk of a partial federal government shutdown if funding legislation is not passed by 12:01 a.m. ET on Saturday [11][14]