Midday Fly By: Microsoft, Meta diverge after earnings

The major averages were broadly lower near noon as investors continue to digest earnings results from major technology companies and a Federal Reserve decision to keep interest rates unchanged. Concerns about parts of the tech sector are underscored by a notable decline in Microsoft shares after it reported weaker-than-hoped-for cloud revenue growth, signaling that sentiment around AI spending and returns remains a key focus for traders.

Looking to commodities, gold was largely unchanged while oil was sharply higher near noon.

Get caught up quickly on the top news and calls moving stocks with these five Top Five lists.

1. STOCK NEWS:

• Microsoft (MSFT) reported better-than-expected Q2 earnings and revenue, though cloud revenue came in weaker-than-expected
• Meta Platforms (META) reported better-than-expected Q4 earnings and revenue and provided an upbeat outlook for Q1 revenue
• Tesla (TSLA) reported upbeat Q4 results and said it would invest $2B to buy Series E preferred shares of xAI
• Caterpillar (CAT) reported better-than-expected Q4 results and provided its outlook for Q1 and FY26
• Nvidia (NVDA) and Microsoft are in talks for an up to $60B investment in OpenAI, The Information reports

2. WALL STREET CALLS:

• BMO downgraded First Solar (FSLR) on overhang from Tesla (TSLA) solar plans
• Rosenblatt upgraded Fortinet (FTNT) on “compelling setup” into earnings
• Zillow Group (ZG) upgraded to Equal Weight at Barclays
• Morgan Stanley upgraded Cencora (COR) to Overweight on specialty position
• Craig-Hallum initiated coverage of StubHub (STUB) with a Hold rating and $12 price target

3. AROUND THE WEB:

• Google (GOOGL) has sent a “cease and desist” letters to Kantar Media, halting Kantar and Barb’s UK TV measurement tools comparing YouTube with linear TV and streamers, FT says
• Hugging Face declined Nvidia’s (NVDA) $500M investment offer at a $7B valuation in late 2025, FT reports
• Merck (MRK) is anticipated to purchase roughly 10% of the shares in Eikon Therapeutics’ (EIKN) upcoming IPO, Bloomberg says
• Alibaba’s (BABA) Cainiao unit will be taking a stake in Zelos Technology, creating a business valued around $2B, WSJ reports
• Sony (SONY) and Singapore’s GIC are establishing a joint venture to buy music copyrights, with plans to invest $2B-$3B in the endeavor, Bloomberg reports

4. MOVERS:

• 1-800-Flowers.com (FLWS) gains after reporting Q2 results
• Modine (MOD) increases after entering a definitive agreement to spin-off and combine its Performance Technologies business with Gentherm (THRM) in a Reverse Morris Trust transaction
• Royal Caribbean (RCL) rises after reporting Q4 results, providing guidance for FY26, and announcing 10 new ships for its European river cruise fleet and
• Joby Aviation (JOBY) falls after pricing a $600M convertible note offering
• SAP (SAP) lower in New York after reporting quarterly results

5. EARNINGS/GUIDANCE

• Lockheed Martin (LMT) reported Q4 results, with EPS and revenue beating consensus
• MarineMax (HZO) reported Q1 results and backed its guidance for FY26
• Altria Group (MO) reported Q4 results and provided guidance for FY26
• Dover (DOV) reported Q4 results, with CEO Richard Tobin commenting, “Our fourth quarter results reflect broad-based top line strength”
• Tractor Supply (TSCO) reported Q4 results, with EPS and revenue missing consensus

INDEXES:

Near midday, the Dow was down 0.18%, or 87.29, to 48,928.31, the Nasdaq was down 1.85%, or 440.61, to 23,416.83, and the S&P 500 was down 0.89%, or 62.39, to 6,915.64.