S&P 500 flat as declines in Microsoft, Nvidia offset other tech gains

NEW YORK: The S&P 500 was muted on Thursday as losses in tech heavyweights Microsoft and Nvidia countered earnings-led gains for Meta and Tesla, while investors parsed a slew of corporate earnings a day after the US central bank held interest rates steady.

Microsoft MSFT.O dropped 6.2% after forecasting disappointing growth in its cloud computing business, while Meta Platforms META.O added 1.8% after beating fourth-quarter revenue estimates.

Commenting on Microsoft’s results, Victoria Fernandez, chief market strategist at Crossmark Global Investments, said that “people were waiting to hear something fantastic, and they just didn’t hear it”.

“They were also waiting to hear if there was going to be any kind of decline in capex spending, and they didn’t really get that either,” Fernandez said.

Microsoft, Meta back big AI spending despite DeepSeek’s low costs

On Wednesday, the chief executives of both Meta and Microsoft defended their heavy investments in artificial intelligence, just days after Chinese startup DeepSeek unveiled a breakthrough in cheap AI models that rattled Wall Street and triggered a bloodbath in AI-linked stocks.

Meanwhile, Tesla TSLA.O gained 2.1% in choppy trading after saying it was on track to roll out new, cheaper EV models in the first half of 2025. It also said it would start testing a paid autonomous car service in June, overshadowing quarterly results that fell short of expectations.

At 11:28 a.m. ET, the Dow Jones Industrial Average .DJI rose 45.95 points, or 0.10%, to 44,756.73, the S&P 500 .SPX gained 5.56 points, or 0.10%, to 6,045.14 and the Nasdaq Composite .IXIC lost 58.13 points, or 0.30%, to 19,573.85.

Ten of the 11 S&P 500 sectors traded higher, with outlier information technology .SPLRCT down 1.2% after Nvidia’s NVDA.O 3.8% drop exacerbated losses.

Of the 149 S&P 500 companies that have reported earnings so far, 73.2% posted numbers that exceeded analyst estimates, according to data compiled by LSEG.

United Parcel Service UPS.N lost 17.5% after forecasting 2025 revenue below expectations, dragging the Dow Jones Transport Average .DJT down 1%.

Lam ResearchLRCX.O rose 8% after the chip-making equipment supplier forecast third-quarter revenue above expectations, while Comcast CMCSA.O lost 12.5% after reporting a steep decline in broadband subscribers for the fourth quarter.

The focus will now be on Apple AAPL.O and Intel INTC.O, which are scheduled to report results after markets close.

The U.S. Federal Reserve kept interest rates unchanged on Wednesday, removing language acknowledging easing inflation from its latest policy meeting statement. Chair Jerome Powell said there would be no rush to cut rates again until inflation and job numbers made it appropriate.

Data showed earlier on Thursday that U.S. economic growth slowed in the fourth quarter, while a jobless claims report for the previous week saw claims fallinglower than expected.

The economically sensitive Russell 2000 small-cap index .RUT was last up 1.2%.

Among other movers, IBM IBM.N jumped 12.7% after the company surpassed fourth-quarter profit expectations. ServiceNow NOW.N lost 13.1% after the software firm forecast annual subscription revenue below Wall Street estimates.

Advancing issues outnumbered decliners by a 4.42-to-1 ratio on the NYSE, and by a 2.1-to-1 ratio on the Nasdaq.

Microsoft, Meta back big AI spending despite DeepSeek’s low costs

The S&P 500 posted 37 new 52-week highs and nine new lows, while the Nasdaq Composite recorded 78 new highs and 80 new lows.