Microsoft-led selloff sparks broader market correction

A sharp pullback in Microsoft (MSFT) has cascaded into a broader market correction. While the company beat earnings expectations on both the top and bottom lines, investors were disappointed by slower cloud performance and higher-than-anticipated capital expenditure plans. Microsoft shares have fallen 11.8% on the day (-12.3% YTD, -4.1% LTM), dragging the broader technology sector lower.

The NASDAQ slid 2.3%, with semiconductor stocks posting similar losses. The Magnificent Seven index declined 1.6%, pulling the S&P 500 down 1.3%, although the equal-weighted S&P slipped just 0.3%. The Dow Jones Industrial Average fell 0.4%, while the Russell 2000 dropped 1.1% in sympathy. Market volatility picked up, with the VIX jumping to 19.4.

Adding to the pressure, precious metals sold off, with gold down 2.2% and silver falling 3.5%. By contrast, copper surged 3.4% to a fresh all-time high of $6.58. Crude oil rallied 3.7% to $65.20 per barrel—after briefly touching $66.50—marking a gain of more than 10% over the past week amid rising risks of conflict involving Iran, the highest level since June 2025. Natural gas and gasoline prices also moved higher.

Risk-off sentiment was further evident in cryptocurrencies, with Bitcoin sliding 5% to below $85,000, its lowest level in a year.

Bond markets remained relatively calm. The U.S. 2-year yield eased 2 basis points to 3.55%, while the 10-year slipped 1 basis point to 4.23%. International yields, including those in Japan, were largely unchanged, and the U.S. dollar index was flat on the session.

Overall, the market damage remained concentrated in technology and basic materials. Energy stocks advanced, and communication services outperformed, supported by strength in Meta Platforms (META). Meta shares jumped 7.6% following solid earnings beats and a well-received conference call, lifting the stock to gains of 9% year-to-date and 6.3% over the past 12 months. Meanwhile, consumer staples, utilities, industrials, financials, and real estate sectors all traded in positive territory.

This selloff increasingly looks like a textbook buying opportunity, with early signs of a rebound already emerging across the major equity indexes. Another factor weighing on sentiment is the renewed risk of a government shutdown, which is especially challenging given the ongoing data blackout following last year’s record-length shutdown.

While the recent swing—from the S&P 500 touching 7,000 just yesterday to bottoming near 6,870 today—represents a level of volatility that has unsettled some investors, the fundamental backdrop of the economy remains solid. Volatility has clearly picked up, but the broader trend continues to point higher.

Sources: Louis Navellier