Two of the “Magnificent Seven” reported earnings Wednesday afternoon. By Thursday midday, they were headed in almost exactly opposite directions.
The S&P 500 was up 1.4% shortly after 1 p.m. ET Thursday, clawing back a chunk of Wednesday’s Fed-driven selloff. The Nasdaq Composite led the recovery, up more than 2.5%, while the Dow Jones Industrial Average added roughly 1.1%. The move was driven almost entirely by one number: Microsoft’s Azure cloud unit grew 43% last quarter, its fastest pace since early 2022, and beat Wall Street’s 40% estimate. Bloomberg put Microsoft shares up as much as 17% intraday.
Meta went the other way. Shares were down roughly 9% Thursday after the company missed on earnings per share — $6.18 against a $7.22 consensus — even as revenue of $60.8 billion beat expectations. CNBC reported the bigger problem was guidance: Meta’s forecast for the current quarter, $61 billion to $64 billion, landed below the roughly $63.15 billion analysts wanted, and free cash flow shrank as AI infrastructure spending kept climbing.
| Index | Level | Change | % Change |
|---|---|---|---|
| S&P 500 | ~7,422 | +94 pts | +1.29% to +1.47% |
| Dow Jones Industrial Average | ~52,140 | +546 pts | +1.06% |
| Nasdaq Composite | ~25,071–25,081 | +629 pts | +2.55% to +2.61% |
| Russell 2000 | 2,931.32 | +25.01 | +0.86% |
| 10-Year Treasury Yield | ~4.66%–4.68% | +2 bps | — |
| VIX | 18.11–19.82 | -2.55 | -12.3% |
That range on the S&P and Nasdaq reflects two live snapshots taken minutes apart during an active, fast-moving session — the number moved between pulls, which is exactly what an intraday recap should show rather than hide.
Meta’s slide extends a losing streak that Google Finance flagged as its eleventh straight decline, one analyst calling the setup “mostly self-inflicted.” Options desks had priced in a swing of roughly $45 either way heading into the print, per TradingView commentary — the actual move landed inside that band but on the painful side of it.
Wall Street’s response split down the middle on price targets. Scotiabank cut to $600 from $700. Susquehanna cut to $650 from $900. Baird trimmed to $750 from $830. Bank of America, by contrast, lowered its target to $810 but kept a bullish framing intact — smaller haircuts from desks that see the AI spending as an investment rather than a hole. Rosenblatt’s Barton Crockett said flatly he didn’t share the market’s negative read on the quarter.
The mechanism here is straightforward once you separate the two stocks. Microsoft’s cloud business converts capital spending into recognized revenue almost immediately — customers pay for Azure capacity as they use it, so faster growth shows up in the top line the same quarter. Meta’s AI spending mostly isn’t doing that yet. It’s building infrastructure for products — better ad targeting, agents, glasses — that haven’t monetized at the same pace, so investors are paying for the capex today against a revenue promise that’s still mostly a forecast. When a market that’s already nervous about AI spending gets one company confirming the payoff and another company still asking for patience, capital rotates hard toward the one with proof.
Underneath both stock moves sits a bond market that’s still digesting Wednesday’s Fed decision. Chair Kevin Warsh held rates steady, but three FOMC members dissented in favor of a hike — a split vote that pushed the 10-year Treasury yield to around 4.66%–4.68% and sent the 30-year to roughly 5.20%, CNN reported, its highest level since 2007. Higher long-term yields raise the discount rate applied to future profits, which hits richly valued growth stocks hardest — a dynamic that makes Meta’s guidance miss sting more than it would have a month ago.
Thursday’s PCE inflation print offered modest cover: prices rose 3.7% year-over-year but dipped slightly month-over-month, with core PCE up 3.3% annually. Second-quarter GDP grew 1.5%, below the 1.8% economists expected. Neither figure was dramatic enough to reverse the yield move, but neither made it worse.
The next test comes after the closing bell. Amazon and Apple both report earnings Thursday, and traders will be watching whether Amazon Web Services can match Azure’s growth rate or whether Meta’s spending anxiety spreads to the rest of the hyperscaler cohort.
This article is for informational purposes only and does not constitute financial advice.
