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The S&P 500 fell on Thursday, bogged down by Microsoft, as traders reacted to the megacap technology company’s latest earnings results as well as the Federal Reserve interest rate decision.

The broad market index slipped 0.4%, while the Nasdaq Composite declined 1.1%. The Dow Jones Industrial Average hovered around the flatline. In cryptocurrencies, bitcoin shed almost 6% and hit its lowest level in almost two months.

Microsoft dragged down the benchmark with an 10% slide, which would be its worst day since March 2020. That’s after the “Magnificent Seven” member reported that cloud growth slowed in the fiscal second quarter. The company also issued soft guidance on operating margin for the fiscal third quarter.

A tumble in software stocks added to the losses, with as fears grew among investors that artificial intelligence would disrupt Microsoft’s business model. ServiceNow shares pulled back 11% even after better-than-expected earnings and revenue for the fourth quarter. Shares of Oracle and Salesforce moved lower by 2% and 6%, respectively.

The iShares Expanded Tech-Software Sector ETF (IGV) — which tracks the performance of the software sector — fell into bear market territory Thursday, with its 5% loss on the day placing it 22% below its recent high. The fund’s move also puts it on track for its largest single-day drop since last April’s tariff-induced rout.

“AI has become like a two-edged sword here. It’s a contributor to growth and spending. It’s a contributor to why valuations are the way they are,” said Rob Williams, chief investment strategist at Sage Advisory. “Now, there are more questions about it, so it’s becoming harder for it to continually deliver positive news.”

With Microsoft’s disappointing results, the pressure is on Apple to deliver with its earnings results, which are set to be reported after the bell Thursday. Williams noted that because it’s only getting more difficult for megacap tech names to spur upbeat sentiment in the market unless they post “blowout” numbers, diversification will become key for investors moving forward.

“Earnings are the path to good returns for the equity market this year, because multiples don’t have a lot of room to contribute,” he told CNBC. “Market breadth is improving, but we are still very concentrated.”

On a positive note, Meta shares jumped 10% after the Facebook parent gave a stronger-than-expected first-quarter sales forecast. Elsewhere, Caterpillar shares were up more than 2% after the industrial giant reported fourth-quarter results that easily beat the Street.

Meanwhile in Washington, the Senate on Thursday failed to clear a procedural vote on a government funding package, raising the chance that much of the federal government will shut down this week. The shutdown would take effect on Saturday at 12:01 a.m. ET if lawmakers cannot advance funding legislation.