Wall Street Daily (January 30): Tech giants' earnings diverge, Microsoft's plunge drags down the broader market; Gold rallies then retreats, Bitcoin crashes, and crude oil surges

[Summary] US stocks ended mixed on Thursday, with divergence driven by tech giants' earnings reports. The S&P 500 Index edged down 0.13%, Nasdaq fell 0.72%, Dow Jones Industrial Average inched up 0.11%, and the Russell 2000 small-cap index rose slightly by 0.05%. Microsoft’s stock plummeted 9.99% due to slower-than-expected guidance for cloud business growth and higher-than-expected capital expenditures, becoming the main drag on the Nasdaq and the tech sector. In major asset classes, gold retreated after rallying, falling 0.74% after hitting a record high above $5,500 during the session; crude oil surged 3.17%, supported by escalating tensions between the US and Iran; Bitcoin dropped 5.21% to a two-month low as funds continued to flow into precious metals.

I. Major Events

1. Microsoft plummets 9.99%, slowdown in cloud growth raises market concerns

Microsoft plummeted 9.99% on Thursday, marking its biggest one-day drop since March 2020. Although Q2 earnings overall beat expectations, Azure cloud business guidance for the next quarter was lowered to 38% growth, while capital expenditures jumped 66% to $37.5 billion, significantly higher than market expectations. The concern in the market is that AI-related investments are increasing, but there remains no clear path regarding when returns will materialize. Morgan Stanley promptly removed Microsoft from its 'Top Pick' list. Trading volume that day was 3.66 times the three-month average, with selling pressure being released intensively.

2. Escalation of US-Iran tensions, Trump warns 'large fleet' approaching

Trump claimed that 'a large fleet is rapidly heading to Iran,' warning Tehran that 'time is running out' and a nuclear deal needs to be reached. The Lincoln Carrier Strike Group has arrived in Middle Eastern waters, with an additional deployment of approximately 5,000 US troops. Iran's Foreign Minister warned that 'fingers are on the trigger.' Rising geopolitical risks have fueled risk aversion, driving gold to break through $5,500 during trading to hit a new high, while crude oil surged to a near four-month peak.

II. Major Trends

1. Small-cap stocks continue to lead, with style rotation ongoing.

Small-cap stocks (IWM) rose 1.76% over the past two weeks and gained 7.82% over the past three months, significantly outperforming large-cap stocks (SPY) at 2.90%. The faster short-term rise in small-cap stocks indicates continued capital dispersion from large-cap tech stocks towards medium and small-cap stocks.

2. Value style dominates, growth stocks under pressure.

Value stocks (SPYV) rose 4.13% over the past three months, outpacing growth stocks (SPYG) at 1.89%. Industrial stocks (DIA) gained 5.46% during the same period, also surpassing tech stocks (QQQ) at 2.12%. In a high-interest-rate environment, highly valued growth stocks face more valuation pressure.

3. Short-term adjustment in tech giants

The Tech Giants ETF (MAGS) fell 1.13% over the past two weeks, and Microsoft’s sharp drop on Thursday further amplified sector pressure. Market sentiment on AI capital expenditure is diverging: companies providing clearer return narratives are gaining favor, while those adopting a 'spend big first, wait for returns' approach are more likely to face repricing.

III. Market Sentiment

Market sentiment remained generally moderate, with Microsoft’s plunge failing to trigger widespread panic. The VIX fear index closed at 16.88, up 3.24%, but still relatively low (below 18). Limited volatility from Microsoft suggests the market views it as an individual stock-level impact rather than a signal of systemic risk.

The CNN Fear & Greed Index recorded 62, down 2 points from the previous day, still within the 'greed' range. Divergence among tech giants and Bitcoin’s pullback slightly cooled sentiment, but overall optimism persists. The AAII Investor Sentiment Survey showed bullish sentiment at 44.4%, higher than the historical average of 37.5%, marking the ninth consecutive week above the mean. Retail investors remain optimistic about future prospects.

IV. Market Scan

1. Index ETFs

The Nasdaq ETF (QQQ) led declines, falling 0.60%, primarily dragged down by Microsoft’s slump; the Small-Cap ETF (IWM) edged up 0.03%, showing relative resilience. The divergence between large caps and small caps continues: IWM gained 7.82% over the past three months, significantly outperforming QQQ at 2.12%, with capital continuing to shift from large-cap tech to medium and small-cap stocks.

2. Industry Sectors

The Communication Services sector (XLC) led gains, rising 2.60%, driven mainly by Meta’s 10.40% surge. The Technology sector (XLK) led declines, dropping 1.58%, with Microsoft being the primary drag. Real Estate (XLRE) rose 1.27%, Financials (XLF) gained 1.06%, and Industrials (XLI) increased 1.05%. In an unchanged interest rate environment, capital favors allocations toward interest-rate-sensitive and value-oriented sectors.

3. Seven Major Tech Stocks

Meta surged 10.40%, with its Q4 earnings report surpassing expectations across the board (EPS $8.88 vs. expected $8.16). The support of AI investments on profitability is starting to gain market recognition, and the 2026 capital expenditure guidance of $115-$135 billion is also seen as manageable. Microsoft plummeted 9.99% due to slowing growth in Azure Cloud, capital expenditure of $37.5 billion exceeding forecasts, and being removed from Morgan Stanley's 'Top Pick' list, marking its worst single-day performance since March 2020. Tesla fell 3.45%, giving up post-market gains from its earnings report during the trading session; concerns were raised by the company’s first annual revenue decline for 2025 and a doubling of capital expenditure to $20 billion.

4. Chinese概念股

The KWEB China Internet ETF rose slightly by 0.55%, showing overall muted performance. Futu (FUTU) dropped 2.04%, impacted as an online brokerage by cooling expectations of trading activity amid a sharp decline in Bitcoin. News of a Canada-China trade agreement failed to provide a significant boost to Chinese stocks listed in the US.

5. Cryptocurrencies and related stocks

Bitcoin's latest price is around $83,000, down 5.21% to a two-month low. ETFs have seen continuous outflows for five days totaling $1.137 billion, with capital rotating into precious metals and $319 million in long positions liquidated. MicroStrategy (MSTR) plunged 9.63% following Bitcoin, reporting unrealized Q4 losses of $17.44 billion and dropping over 60% from its all-time high. Robinhood (HOOD) fell 2.09% on expectations of declining cryptocurrency trading volumes.

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