Microsoft Boosts Market Despite Dow's Decline

Meta and Microsoft's efforts to boost the stock market were partially successful as the Dow Jones Industrial Average fell 0.4% and the S&P 500 dropped 0.1%. However, the Nasdaq Composite gained 0.1%. Despite Microsoft's positive performance, the market breadth remained subdued.

In the wake of Meta Platforms Inc. (META) and Microsoft Corp. (MSFT) reporting robust financial results, the stock market showed mixed reactions. While the Dow Jones Industrial Average (DJIA) fell 0.4%, the S&P 500 dropped 0.1%, and the Nasdaq Composite gained 0.1% [1]. Despite Microsoft's positive performance, the market breadth remained subdued, reflecting broader economic concerns.

Meta reported Q2 2025 earnings of $47.5 billion, surpassing analyst estimates by 22% and marking a 38% year-over-year (YoY) increase in earnings per share (EPS) to $7.14 [1]. Daily active users rose 6% to 3.48 billion, and ad impressions increased by 11% with a 9% rise in average ad price. The company spent $17.01 billion on capital expenditures, a 101% YoY increase, and expects to invest between $64-72 billion in capex for 2025 [1].

Microsoft reported Q4 FY2025 earnings, with cloud demand driving growth. The company's overall revenue rose 20% to $38.1 billion, exceeding estimates, driven by a 24% increase in cloud sales to $20.3 billion [2]. Microsoft's cloud business now accounts for 52% of its total revenue, with Azure's revenue growing 39% YoY in constant currency [2]. The company expects to invest more than $30 billion in capital expenditures for Q1 FY26, with half of the investment going towards long-lived assets [2].

However, the U.S. stock market reacted to a mixed set of earnings and President Trump's revised tariff structure, with the Dow Jones Industrial Average futures declining 402 points, or 0.9%, on Friday, August 1 [1]. US Treasury yields fell below 4.5%, contributing to the overall trend of stocks heading for weekly gains [1]. The U.S. economy added just 73,000 nonfarm payroll jobs in July, missing economist expectations of a 100,000 gain [3]. Additionally, President Trump announced updated tariffs ranging from 10% to 41%, with an additional 40% levy on items transshipped to bypass duties [3]. The tariffs will significantly impact Canadian imports, with a 35% tariff now in place [3].

The Dow Jones tumbled over 1.85% on Friday peak-to-trough, with equity markets scrambling to recover their footing after a disappointing Nonfarm Payrolls (NFP) report [2]. The Dow Jones Industrial Average (DJIA) fell to a five-week low, tapping 43,330 for the first time since late June and running into technical congestion at the 50-day Exponential Moving Average (EMA) near 43,600 [2]. The major equity index saw its worst week since the Trump administration announced global tariffs in early April, and the Dow is down over 3% from Monday's opening bids near 45,000 [2].

US NFP net job gains slowed sharply in July, falling to 73K over the month, well below the expected 110K [2]. With a sharp downward revision in the US’s labor outlook now on the table, markets are piling back into bets of a rate cut from the Federal Reserve (Fed) in September. Markets had pulled back on rate cut expectations after the Fed held interest rates steady earlier this week, citing a need to monitor additional employment and inflation data [2].

Despite a steepening slowdown in what was considered a healthy labor market until Friday, the US is still grappling with a general decaying in economic data overall: inflationary pressure, mostly from potential tariff impacts, are still biting around the edges of headline inflation metrics, and sentiment surveys at both the business and consumer levels are beginning to throw up red flags [2].

References:
[1] https://www.ainvest.com/news/procore-technologies-nyse-pcor-stock-price-quotes-forecasts-2508/
[2] https://www.fxstreet.com/news/dow-jones-industrial-average-tries-to-recover-from-nfp-plunge-202508011802
[3] https://fsinsight.com/technical-strategy/daily-technical-strategy/2025/07/31/breadth-slowly-starting-to-wane-despite-breakout-in-magnificent-7/