US equity indexes slumped in midday trading Thursday as Microsoft's (MSFT) quarterly results sparked a sell-off in technology.

The Nasdaq Composite sank 1.8% to 23,434.6, with the S&P 500 down 0.9% to 6,918.9 and the Dow Jones Industrial Average lower by 0.1% 48,948.4.

Technology plunged 3.7%, the worst performer among sectors, followed by a decline in consumer discretionary. Energy was the top gainer, followed by communication services and real estate.

Microsoft (MSFT) Azure's 38% growth on a constant-currency basis exceeded the company's guidance by 1 percentage point, but disappointed investors, Morgan Stanley said in a Thursday research report, while noting a "remarkably strong" fiscal Q2.

Microsoft's disclosure that OpenAI represents 45% of its commercial remaining performance obligations was a first-time disclosure, and the technology giant provided no specific historical comparisons on that percentage of commercial RPO from the OpenAI relationship, according to a note from Truist Securities.

In economic news, initial jobless claims declined to 209,000 in the week ended Jan. 24 from an upwardly revised 210,000 in the previous week, compared with expectations for 205,000 in a survey of analysts compiled by Bloomberg.

"If the claims data is to be read at a surface level and layoff activity was much lighter than usual in January 2026, we could see a very strong jobs number next Friday," according to a Jefferies note.