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The stock market continued to see big ups and downs during the course of trading on Thursday. Market participants are having a lot of difficulty deciding whether the major macroeconomic factors affecting Wall Street are short term in nature or will have longer-term implications, and as attitudes change, stock market moves have been violent. As of 12:30 p.m. ET, the Dow Jones Industrial Average (^DJI -1.36%) was down 187 points to 31,647. The S&P 500 (^GSPC -1.17%) dropped 16 points to 3,919, and the Nasdaq Composite (^IXIC -0.94%) gave up 4 points to 11,361.

Until recently, giga-cap technology stocks like Apple (AAPL -3.68%) and Microsoft (MSFT -3.11%) had large avoided the full brunt of the bear market in the Nasdaq, even as smaller companies lost 50% to 80% or more of their value. However, over the past couple of months, some of the largest companies in the market, including Meta Platforms (FB 0.50%), Netflix (NFLX 3.32%), and (AMZN 0.43%), started to move sharply lower. Those big-name moves put a bigger dent in market capitalization-weighted benchmarks.

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But along the way, Apple and Microsoft largely avoided the brunt of the downturn. That has changed this week, and today, both companies are seeing bigger losses than the broader market as investors try to assess whether they too will give way to negative market sentiment.

Strong fundamentals

For the most part, Apple and Microsoft have been able to stand up to scrutiny because of their strong financial performance. For instance, Apple’s numbers for the fiscal second quarter ending March 26 included a 9% rise in overall revenue and a 6% gain in net income. The tech giant saw notable results from its iPhone, Mac, and wearables and accessories segments, which helped to offset some weakness in iPad sales. Apple also continued to grow its important services business, which some have seen as a potential weak link amid rising competition in areas like streaming content.

Similarly, Microsoft has done a good job of capitalizing on the opportunities to serve customers getting more involved in cloud computing. Microsoft’s intelligent cloud segment posted the biggest rise in revenue among its businesses, driven by the popularity of the Azure cloud infrastructure platform. Other areas of Microsoft’s business also owe much of their success to the cloud, particularly the subscription-as-a-service versions of the Office productivity software suite. An 18% sales boost helped push adjusted net income higher by 13% in the fiscal third quarter ending March 31, and the software behemoth kept returning capital to shareholders through buybacks as well as dividends.

Gaps in the armor?

However, both Apple and Microsoft have seen some declines in their share prices in the past week. Apple is down 3% on Thursday afternoon, and it has fallen nearly 15% since May 4. Microsoft has suffered a 12% drop in just over a week, including a more than 2% decline in today’s session.

Apple and Microsoft are highly liquid stocks, making them less susceptible to some of the situations that can cause more dramatic movements in share prices of smaller companies. Index funds hold truly massive amounts of their stock. To the extent that long-term investors have stayed the course with their index holdings, that has helped provide ballast for Apple’s and Microsoft’s share prices.

However, impatient investors have started to register substantial outflows from their fund holdings. Forced selling from index funds can have an impact on share prices even for giga-cap tech stock giants, most notably because their weightings in various indexes tend to be extremely high.

There’s little to suggest anything wrong with Microsoft or Apple in terms of long-term business prospects. Nevertheless, short-term traders will watch the two stocks to see if they can avoid further losses here. If they prove vulnerable to a downturn, then some traders will see that as evidence that a more extensive decline for the overall market could be ahead.