Stocks fall as Microsoft drops, oil jumps on Iran tensions

NEW YORK (Reuters) – Global shares fell on Thursday and were on pace to snap a six-session streak of gains, weighed down by a plunge in Microsoft after its quarterly results, while oil prices jumped on U.S.-Iran tensions.

On Wall Street, U.S. stocks fell, dragged down by a more than 12% drop in Microsoft shares, putting the company on track for its biggest daily percentage decline since March 2020, as investors were unnerved by record spending on artificial intelligence last quarter.

That overshadowed a gain of more than 10% in Meta Platforms after its quarterly results and illustrated how investors are willing to forgive massive AI spending as long as it is accompanied by strong growth.

Fellow “Magnificent Seven” member Tesla dipped 2.5% after reporting earnings, while Apple is scheduled to post results after the closing bell.

“There’s just no momentum in these stocks; it’s just if you don’t beat by a lot, then you get hammered like Microsoft, which technically beat earnings,” said Jay Hatfield, CEO and CIO of Infrastructure Capital Advisors in New York.

“So the momentum is completely out of tech, and people are looking elsewhere, right now it’s metals in terms of pure momentum, but if you’re focused on valuation, there’s just a ton of opportunities.”

The Dow Jones Industrial Average fell 47.35 points, or 0.10%, to 48,968.25, the S&P 500 fell 36.08 points, or 0.52%, to 6,941.95 and the Nasdaq Composite fell 299.67 points, or 1.26%, to 23,557.78.

Of the 133 companies in the S&P 500 that have reported earnings, 74.4% have topped expectations, according to LSEG data, above the 67% beat rate since 1994 but below the 78% over the past four quarters.

MSCI’s gauge of stocks across the globe fell 3.65 points, or 0.35%, to 1,048.02, its first decline after six sessions of gains, while the pan-European STOXX 600 index closed down 0.23% as a drop in technology names outweighed gains in mining and energy stocks.

The dollar index, which measures the greenback against a basket of currencies, edged up 0.08% to 96.25, its second straight daily advance after a recent bout of weakness, with the euro up 0.04% at $1.1957.

The dollar was supported in part by Wednesday’s decision by the Federal Reserve to leave interest rates unchanged, with Chair Jerome Powell citing a solid economy and lowered risks to both inflation and employment, indicating the central bank could have a long runway before cutting rates again.

U.S. economic data on Thursday showed weekly initial jobless claims fell, indicating layoffs remained low, although soft hiring kept consumers pessimistic about the labor market.

Oil prices surged, with U.S. crude up 3.39% to $65.36 a barrel and Brent jumping to $70.74 per barrel, up 3.42% on the day after climbing more than 5% on concerns about possible U.S. military strikes on Iran.

The geopolitical tensions helped keep upward pressure on gold, which hit a record of $5,594.82 an ounce, its ninth straight record high. Gains faded as investors took profits after the run higher, however. Spot gold was last down 1.59% to $5,313.61 an ounce, but still on pace for its biggest monthly percentage gain since 1980.

(Reporting by Chuck Mikolajczak, additional reporting by Pranav Kashyap and Twesha Dikshit in Bengaluru, Tom Wilson in London and Wayne Cole in Sydney; Editing byJane Merriman and Andrew Heavens, Kirsten Donovan)