US Market on January 29: Microsoft Selloff Pressures Stocks

US equity markets finished trading on January 29 with mixed dynamics. The S&P 500 declined by 0.13%, the Nasdaq 100 fell by 0.53%, while the Dow Jones Industrial Average rose by 0.11%. Market pressure intensified after a sharp selloff in Microsoft shares, which dragged down the technology sector and weakened overall investor sentiment.

Microsoft shares dropped more than 10% following the release of quarterly earnings. Investors reacted negatively to Azure cloud revenue growth that merely met expectations and to higher-than-anticipated operating expenses. The decline in Microsoft weighed on most members of the so-called Magnificent Seven, with the exception of Meta Platforms and Apple, and became the main negative driver for the broader market.

Despite overall market weakness, several companies posted strong performances. Meta Platforms surged more than 10% after issuing a revenue outlook that significantly exceeded analyst expectations. Shares of IBM gained over 5%, while Honeywell International rose about 4% after reporting better-than-expected fourth-quarter results, helping the Dow Jones Industrial Average move into positive territory.

Markets recovered from session lows after reports suggested progress toward a temporary funding agreement for the US government. Investors also digested macroeconomic data. Initial jobless claims came in at 209,000, slightly above expectations, while continuing claims fell to a six-month low. The US trade deficit widened to $56.8 billion in November, while factory orders rose 2.7% month over month.

WTI crude oil prices jumped more than 3%, reaching a 4.25-month high. The move followed geopolitical statements from the US president regarding a tougher stance toward Iran over its nuclear program. Higher oil prices supported energy stocks but also contributed to rising inflation expectations.

The yield on the US 10-year Treasury note declined to 4.227% amid demand for safe-haven assets. Markets are currently pricing in only a 14% probability of a 25-basis-point rate cut by the Federal Reserve at its March meeting. European government bond yields also moved lower, while investors see no chance of an ECB rate hike at the next policy meeting.