U.S. Stocks Sink as Oil Surges, Microsoft Gains While Meta Slides After Earnings

Market Overview

Global markets focused on three major developments on Wednesday.

First, U.S. equities suffered a broad-based selloff. The Dow Jones Industrial Average fell 2.19% to 51,594.14, marking its largest single-day point decline in nearly 15 months. The Nasdaq Composite dropped 1.74%, extending its losing streak to six consecutive sessions. The Philadelphia Semiconductor Index plunged more than 5% intraday, while the CBOE Volatility Index (VIX) climbed 13.29% to 20.63.

Second, geopolitical tensions in the Middle East intensified across three separate fronts. Iran launched missiles toward U.S. military bases, Saudi Arabia and the United States conducted joint airstrikes in Iraq, and Washington expanded sanctions targeting entities involved in the Strait of Hormuz shipping fee network. As supply concerns escalated, WTI crude oil surged 6.56% to $84.46 per barrel, while Brent crude advanced 7.91%.

Third, earnings from major technology companies painted a mixed picture. Microsoft's Azure cloud revenue jumped 43% year over year, with annual cloud revenue surpassing $100 billion for the first time, sending the stock up 8% in after-hours trading. In contrast, Meta issued weaker-than-expected third-quarter guidance while raising its capital expenditure outlook, causing its shares to fall 8% after the close.

The Federal Reserve left interest rates unchanged, but three policymakers voted in favor of a rate hike, marking the first three-member dissent since 2016. Safe-haven demand also strengthened, with spot gold rising 0.87% to $4,064.63 per ounce after briefly breaking above the $4,100 level during the session. Meanwhile, China's A-share market outperformed regional peers, with the ChiNext Index gaining 1.55%.

Market OutlookBig Tech Earnings and AI Capital Spending

Apple and Amazon are scheduled to report earnings today, with investors closely watching growth trends across hardware, services, cloud computing, and e-commerce. Following Microsoft's continued AI investment and Meta's higher capital expenditure guidance, the market's primary debate has shifted toward whether aggressive AI spending can generate sufficient returns while maintaining healthy cash flow.

Middle East Escalation and Oil Supply Risks

Three separate geopolitical flashpoints intensified within a 24-hour period, driving crude oil prices more than 6% higher in a single session. Should tensions escalate further or shipping through the Strait of Hormuz face disruptions, supply-side risk premiums could continue to rise, reinforcing the link between higher energy prices and inflation expectations.

Key Events to Watch

• Apple and Amazon earnings releases

• U.S. Q2 GDP and June Core PCE Price Index

• Bank of England interest rate decision and Governor Andrew Bailey's press conference

• Eurozone Q2 GDP and Germany's July CPI

• South Korean retail investors face heavy losses in leveraged ETFs as brokerages issue widespread margin calls