Microsoft Loses $76 Billion in Single Day

U.S. stocks closed slightly lower on Tuesday as rising Treasury yields and geopolitical uncertainty continued to weigh on investor sentiment, while fresh concerns in the private credit sector added to market pressure.

Markets have been navigating a volatile mix of rising oil prices and cautious optimism over a potential diplomatic resolution to the conflict involving the United States, Israel, and Iran.

Although Donald Trump said progress is being made in talks with “the right parties” in Iran, reports that the Pentagon may deploy thousands of additional troops from the 82nd Airborne Division to the Middle East fueled concerns about a prolonged conflict and sustained energy price pressures.

Major U.S. indices ended the session in negative territory. The Dow Jones Industrial Average fell 0.2% (around 84 points), bringing its total losses to nearly 6% since the start of the conflict.

The S&P 500 declined 0.4%, extending losses to 4.7%, while the Nasdaq Composite dropped 0.8%, with cumulative losses reaching 4% over the same period.

Rising Treasury yields, combined with a weak two-year note auction, added further strain on equities.

Meanwhile, expectations for interest rate cuts have shifted dramatically. According to the FedWatch Tool, traders no longer anticipate any rate cuts in 2026, compared to expectations of two cuts prior to the escalation. Instead, markets are now pricing in a greater than 30% probability of a rate hike by year-end.

Shares of Microsoft fell 2.7% on Tuesday, closing at their lowest level in 11 months and wiping out approximately $76 billion in market value in a single session.

The decline followed warnings from OpenAI regarding the risks tied to its relationship with Microsoft ahead of a potential initial public offering.

In a document reviewed by CNBC, OpenAI stated that any changes or termination of its commercial partnership with Microsoft, or failure to diversify partnerships, could materially harm its business, financial condition, and operating results.

Microsoft has been a key backer of OpenAI, investing $1 billion in 2019 and an additional $10 billion in early 2023.

Separately, concerns in the private credit market resurfaced after reports that Ares Management imposed a 5% cap on redemptions in one of its private credit funds amid rising withdrawal requests.

Apollo Global Management also faced increased redemption demand, signaling broader stress in the sector.

Shares of Ares fell 1%, while Apollo rose 0.7%. Meanwhile, Blackstone declined 1.25%, marking its fourth consecutive daily loss.