Dow falls more than 300 points after Microsoft’s gloomy forecast

Wall Street’s major indexes tumbled on Wednesday as Microsoft’s outlook hurt tech stocks and Boeing’s dismal quarterly report fueled recession fears.

The Dow fell 356 points, or 1.1%, to 33,377, the Nasdaq fell 1.8% and the S&P 500 fell 1.3%.

Microsoft shares fell 3% after the company warned that the growth of its lucrative cloud business could stall while its PC division continues to struggle.

Amazon, Salesforce and ServiceNow, which have significant cloud businesses, fell between 2.5% and 4.5%.

Other big growth stocks including Apple, Alphabet and Tesla also fell 1.5% to 3%.

Growth stocks, however, rebounded in January after a dip last year, and investors are now focusing on earnings reports to gauge the impact of the Federal Reserve’s rate hike and assess whether the renewed enthusiasm for these stocks will continue.

“The environment may look attractive because some of these cloud companies like Salesforce have fallen hard, but people are still skeptical because we are heading into weaker economic news,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.

“We still have inflation, we still have Fed rate hikes, we see companies laying off thousands of people… We haven’t fully completed the cycle yet.”

The vast majority of traders expect the Federal Reserve to raise interest rates by another 25 basis points at its meeting next week.

They now see the top rate cap at 4.91% in June, even as Fed policymakers have repeatedly supported rate hikes above 5%.

Data released later this week is likely to show that the personal consumption expenditure index fell 0.1% in December, compared with a 0.1% rise in the previous month. Leading data on GDP for the fourth quarter are also expected.