[New York Stock Exchange] Mixed Close as Microsoft Plunges... Dow Up 0.11%, Nasdaq Down 0.72% (Comprehensive)

Concerns Over Possible U.S. Federal Government Shutdown

The three major New York stock indexes wavered on the 29th (local time) due to a sharp plunge in Microsoft (MS) shares. As skepticism toward big tech companies increased, the market ended mixed. Additionally, growing concerns over a potential federal government shutdown also weighed on the stock market.

On this day, the Dow Jones Industrial Average, which is centered on blue-chip stocks, closed at 49,071.56, up 55.96 points (0.11%) from the previous trading day. The S&P 500 index, focused on large-cap stocks, and the Nasdaq index, focused on technology stocks, closed down by 0.13% and 0.72%, respectively.

By sector, most major technology stocks showed weakness. Microsoft shares plunged about 10%, marking their worst decline since March 2020. Microsoft, one of the so-called "Magnificent 7" representing major U.S. big tech, reported the previous day that its cloud division's growth slowed in the second quarter of last year. The company also provided weak guidance for its third-quarter operating margin.

The overall weakness in software stocks also contributed to the decline in the indexes. As concerns grew that artificial intelligence (AI) could erode Microsoft’s business model, ServiceNow shares fell by about 10% despite strong earnings. Oracle and Salesforce also dropped by 2% and 6%, respectively. On the other hand, Meta surged more than 10% on a better-than-expected first-quarter sales outlook for last year. Equipment manufacturer Caterpillar also gained over 3% as its fourth-quarter results exceeded market expectations.

Rob Williams, Chief Investment Strategist at Sage Advisory, told CNBC, "AI has been a driver of growth and spending and the reason for high valuations, but now ongoing doubts are making it harder to generate positive momentum."

CNBC analyzed that the possibility of a federal government shutdown, highlighted by the failure of a budget procedure vote in Washington, D.C., affected the stock market. On this day, the U.S. Senate rejected the federal government operating budget, including the Department of Homeland Security (DHS), in a procedural vote with 45 in favor and 55 against.

The Democratic Party has stated that it will not pass the DHS budget until the Donald Trump administration agrees to reforms that curb aggressive immigration enforcement by Immigration and Customs Enforcement (ICE), which is under DHS. Chuck Schumer, the Democratic Senate Majority Leader, said, "The American people support law enforcement and border security. (However) they do not support ICE terrorizing our streets and killing American citizens," urging that ICE must be controlled and reformed.