Nasdaq slumps on Microsoft's caution on revenue; Dow, S&P drop as well

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On Wednesday major market averages found themselves in negative trading territory with tech dragging after Microsoft sounded concern on top-line outlook.

Early on and the Nasdaq Composite (COMP.IND) slid 2%, the S&P 500 (SP500) dipped 1.4%, and the Dow (DJI) declined by 0.9%.

Microsoft (MSFT) fell 3.3%, reversing its post-earnings pop after CFO Amy Hood said on the conference call that "moderating consumption growth" in the cloud business would likely extend into current fiscal Q3. MSFT guided for quarterly revenue of $50.5B to $51.5B, about $1B shy of the Wall Street consensus.

The caution on the cloud had a knock-on effect on Amazon (AMZN), which was down 4.2%. Also in megacap land, Tesla (TSLA) reports its earnings after the bell today.

Rates were lower. The 10-year Treasury yield (US10Y) fell 3 basis points to 3.43% and the 2-year yield (US2Y) fell 2 basis points to 4.12%.

"There’s been a little bit of a bias towards risk-off sentiment over the last 24 hours, thanks partly to some weaker-than-expected earnings releases that added to growing concerns about a potential US recession," Deutsche Bank's Jim Reid wrote.

The economic calendar is fairly empty and traders will be positioning for GDP on Thursday.

Among other active stocks, News Corp. (NWS) is rallying after Rupert Murdoch called off his plan to re-merge Fox and News Corp.