ASX to Fall as Microsoft Drags Wall Street; Apple Earnings Awaited
The US stock market faced significant declines as Microsoft’s disappointing performance weighed heavily on investor sentiment. The S&P 500 fell by 1% after briefly approaching a record high earlier in the day. The Dow Jones Industrial Average dropped 113 points, equating to a decrease of 0.2%, while the Nasdaq composite saw a more pronounced decline of 1.9%.
Microsoft’s Influence on Wall Street
Microsoft’s stock plummeted by 12%, despite the company reporting stronger-than-expected profits and revenue for the latest quarter. Investors were more concerned about the company’s substantial spending on investments and the potential slowdown in growth within its Azure cloud business. The backlash resulted in Microsoft being responsible for more than two-thirds of the S&P 500’s decline, marking its worst trading day since the market crash in 2020.
Tesla and Other Market Players
Tesla also contributed to the market downturn, lowering by 2.3%. Although the company delivered profits exceeding analysts’ expectations, these were significantly down from the previous year. Elon Musk, Tesla’s CEO, is urging investors to shift their focus from declining car sales to advancements in robotaxis and robotics.
Cautious Growth Amid Market Pressures
Many companies are currently under pressure to show solid profit growth following significant stock price increases. ServiceNow fell 11.8% despite reporting stronger profits, continuing a downward trend seen since the summer.
- Meta Platforms rose by 8.6%, driven by profit results that exceeded expectations.
- IBM climbed 6% after it surpassed profit and revenue estimates.
- Southwest Airlines soared 15.4% despite missing profit forecasts, boosted by an optimistic earnings forecast for 2026.
Trends in Precious Metals
The gold market saw wild fluctuations, with prices nearing $5,600 per ounce before falling back below $5,200. By the end of the trading session, gold was at $5,286.90, down 1% from the previous day. Silver experienced similar volatile movements as investors reacted to risks in the wider economic landscape.
Investor Sentiment and Market Outlook
Market sentiment remains cautious as investors assess risks, including high government debt, political instability, and concerns over stock market valuations. Bitcoin also suffered a nearly 5% drop, nearing $85,000.
Economic Indicators and Federal Reserve Actions
The yield on the 10-year Treasury note dipped to 4.24% as the Federal Reserve paused interest rate cuts. This decision follows three consecutive rate cuts aimed at bolstering the job market amid persistent inflation above the targeted 2%. President Trump has been vocal about his desire for lower interest rates and criticized the Fed’s chair for taking too long to respond.
International Market Movements
In contrast to the US markets, stock indexes in Europe and Asia saw gains, with South Korea’s Kospi climbing 1%, driven substantially by chipmaker SK Hynix.
