Dow slides more than 300 points after Microsoft’s dismal forecast

Major Wall Street indexes fell on Wednesday as Microsoft’s outlook weighed on tech stocks, while a dismal quarterly report from Boeing added to fears of a recession.

The Dow Jones fell 356 points, or 1.1%, to 33,377, the Nasdaq slipped 1.8% and the S&P 500 fell 1.3%.

Microsoft shares fell 3% after warning that growth in its lucrative cloud business could stagnate, while its PC unit continued to struggle.

Amazon, Salesforce and ServiceNow, which have large cloud businesses, fell between 2.5% and 4.5%.

Other big growth stocks, including Apple, Alphabet and Tesla, also fell between 1.5% and 3%.

Growth stocks, however, rebounded in January after being beaten last year, with investors now focusing on earnings reports to gauge the impact of Federal Reserve rate hikes and to assess whether the renewed enthusiasm for these actions will be maintained.

An overwhelming majority of traders expect the Federal Reserve to raise interest rates another 25 basis points at its meeting next week.
JUSTIN LANE/EPA-EFE/Shutterstock

“The environment may look attractive because some of these cloud companies, like Salesforce, are so down, but people are still skeptical because we’re heading into weaker economic news,” said Robert Pavlik, senior portfolio manager. at Dakota Wealth.

“We still have inflation, we still have the Fed raising interest rates, we see companies laying off thousands of people…We haven’t fully gone through the cycle yet.”

An overwhelming majority of traders expect the Federal Reserve to raise interest rates another 25 basis points at its meeting next week.

They now see the terminal rate peaking at 4.91% in June, even as Fed policymakers have repeatedly backed the rate hold above the 5% level.

Data later in the week is expected to show December’s Personal Consumption Expenditure Index fell 0.1% from a 0.1% rise the previous month. Fourth quarter GDP advance figures are also due.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button