Dow dropped 363, decliners over advancers better than 3-1 & NAZ slid back 211. The MLP index lost 1+ to 231 & the REIT index fell 2+ to 393. Junk bond funds saw some selling & Treasuries had a little buying which reduced yields. Oil rose, nearing 81 & gold was off 2 to 1833.
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Microsoft (MSFT), a Dow stock, execs said to expect a continuation of the weak pace of business that emerged in Dec, which hurt the software maker’s fiscal 2nd qtr results. “In our commercial business we expect business trends that we saw at the end of December to continue into Q3,” CFO Amy Hood said. In particular, the company saw less growth than expected in Microsoft 365 productivity software subscriptions, identity & security services, & business-oriented Windows products. Growth in consumption of the company's cloud computing service Azure also slowed down, she added. The company sells products such as Xbox consoles & Surface PCs to consumers, but most of its revenue comes from commercial clients such as companies, schools & govs. That's where the impact will show up. A metric dubbed Microsoft Cloud, including Azure, commercial subscriptions to Microsoft 365, commercial LinkedIn services & Dynamics 365 enterprise software, now represents 51% of total sales. Hood said said Azure growth would slow down more. In the full Dec qtr, revenue from Azure & other cloud services rose 42% in constant currency. But in Dec, Hood said, growth was in the mid-30% range in constant currency & she forecast a further slowdown of 4-5 percentage points in the current qtr, which ends in Mar. The slowdown that started in Dec should also carry thru to Q3 results for Windows commercial products & cloud services, a category that includes Windows volume licenses for businesses. Her forecast included flat revenue for Windows commercial products & cloud services, compared with a decline of 3% in the fiscal 2nd qtr. The stock dropped 4.91 (2%).
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Microsoft’s forecast suggests gloomy tech environment will continue
Weekly mortgage demand jumps 7% as interest rates drop to lowest level since September
Treasury yields dip as investors assess earnings, economic outlook
Many investors are nervous, so they are buying safe haven gold & Treasuries. When they buy Treasuries, yields fall. That's a minus for Fed & the work they are doing on interest rates. The inverted yield curve (the yield on short term debt is above long term debt) persist & it is a classic signal of a coming recession.Dow Jones Industrials
