Closing Bell: Microsoft Sell-Off Turns Stocks Lower on Thursday

U.S. stocks finished fell on Thursday, bogged down by Microsoft (MSFT -10%), as traders reacted to the megacap technology company’s latest earnings results as well as the Federal Reserve interest rate decision. A tumble in software stocks added to the losses, with as fears grew among investors that artificial intelligence would disrupt Microsoft’s business model. Although the selling was broad-based early in the session, stocks finished the session far off of intra-day lows.

Microsoft (MSFT) shares plummet despite earnings beat.

The tech giant dumped 10% on Thursday despite beating Wall Street estimates on the top and bottom lines. Investors worried about that cloud growth slowing and about the company's ballooning AI-fueled spending. In Q2, earnings per share (EPS) of $5.16 on revenue of $81.27 billion topped the $3.92 and $80.3 billion Wall Street was anticipating. Capital expenditures rose sharply and hit $37.5 billion in the quarter, up from $22.6 billion in the second quarter of 2025.

Meta Platforms stock jumps on Earnings.

Meta Platforms (META) stock climbed 10.4% on Thursday after its fourth quarter earnings topped analysts' expectations on the top and bottom lines. In Q4, Meta reported earnings per share (EPS) of $8.88 on revenue of $59.9 billion, ahead of the $8.16 and $58.4 billion analysts were expecting. The stock rallied despite a massive jump in Capex. Meta raised its 2026 capital expenditures guidance, saying it anticipates spending between $115 billion and $135 billion in 2026, up from the $72.22 billion the company spent in 2025. Although investors have previously expressed concern about Meta’s AI spending spree, they took comfort in the company’s latest results, which showed 24% year-over-year revenue growth, driven by online ads.

Volatility rising on Potential Government Shutdown.

In Washington, the Senate on Thursday failed to clear a procedural vote on a government funding package, raising the chance that much of the federal government will shut down this week. The shutdown would take effect on Saturday at 12:01 a.m. ET if lawmakers cannot advance funding legislation. 

• Oil Futures surged over 3.5% to 5-month highs on Thursday as President Donald Trump weighed military strikes on OPEC member Iran. The oil market is monitoring whether the unrest in Iran and possible military intervention by the U.S. could lead to a disruption of crude supplies in the region.
• Gold futures hit another all-time high above $5600 before pulling back on Thursday as investors took profits after a record high, yet prices remained on course for their best month since the 1980s amid heightened economic and geopolitical uncertainty.

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