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US equities faced renewed pressure on Thursday as megacap technology earnings and the Federal Reserve’s (Fed) tepid showing this week weighed on sentiment. The S&P 500 fell 0.7%, the Nasdaq dropped 1.6%, and the Dow slipped around 0.2%, while cryptocurrencies declined more than 4% to their lowest levels in nearly two months. Microsoft was the primary drag, tumbling 11% after reporting slower cloud growth and issuing weaker operating margin guidance, marking its worst day since early 2020.

Rising tides don't lift all boats forever
 

Weakness spread across the software sector, reflecting growing investor unease about still-rising artificial intelligence spending and its hypothesized potential to overturn established business models. ServiceNow (NOW) fell sharply despite beating earnings expectations, while Oracle (ORCL) and Salesforce (CRM) also declined. The software-focused IGV ETF dropped into bear market territory, now more than 20% below its recent high, highlighting how quickly sentiment has shifted in a segment that had previously benefited from AI optimism. While AI remains a long-term growth driver, it is no longer delivering consistently positive surprises, making earnings quality and diversification increasingly important as valuation expansion becomes harder to sustain.

There were notable bright spots on Thursday: Meta (META) shares surged after the company delivered strong earnings. Meta posted 24% revenue growth driven by advertising and issued an upbeat sales forecast. Investors appeared comfortable with Meta’s aggressive AI investment plans, even as capital expenditures are set to nearly double from last year, signaling confidence in its ability to fund growth while maintaining profitability. Caterpillar (CAT) also added to the positive side of earnings season with a solid quarterly beat.

"Doctor Copper" signals everything's okay
 

Outside equities, copper prices reached an all-time high, tangentially reaffirming expectations for resilient global economic activity. Futures climbed more than 8% to $6.45 a pound, extending a strong multi-month rally. Copper mining stocks and related ETFs posted outsized gains, with several major producers up 35-50% in January alone, marking one of the strongest periods for the sector in more than a decade.

Dow Jones daily chart
 

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