Stock Market Could Rise Wednesday. Thank Microsoft Earnings.

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Microsoft

‘s earnings weren’t enough to arrest the market’s decline. Its a conference, call, however, was another story.

If anything was going to arrest the stock market’s decline before Wednesday’s Federal Reserve announcement, it was going to be Microsoft earnings. And they weren’t bad. Microsoft reported earnings of $2.48 a share, beating forecasts for $2.31, on sales of $51.7 billion, topping estimates for $50.9. Azure revenue growth grew by 46%, according to Wedbush analyst Dan Ives, beating Street expectations for 45% growth, but unfortunately lower than “some bullish whisper numbers at 48%.” And with that, Microsoft stock (ticker: MSFT) had fallen 5.2% at 5:18 p.m. in after-hours trading.

That wasn’t just a problem for owners of Microsoft stock. It’s also the second-largest publicly traded company in the U.S., which means it’s the second-largest holding in the

S&P 500
and the

Nasdaq-100.
And that means those indexes are already falling, even though the market isn’t even open right now. The

SPDR S&P 500 ETF
(SPY), which tracks the S&P 500 and has a 6% position in Microsoft, had fallen 1% in after-hours trading, while the

Invesco QQQ
(QQQ), which tracks the Nasdaq-100 and has a 9.9% stake in Microsoft, had dropped 1.6%.

That all changed after Microsoft’s conference call, which caused investors to have a change of heart. And why wouldn’t they? Microsoft said its third-quarter Productivity and Business Processes revenue would come in between $15.6 billion and $15.85 billion, and its Personal Computing revenue would come in between $14.15 billion and $14.45 billion. It also said its margins would grow slightly. And with that, Microsoft’s loss became a gain—as did the stock market’s.

With Microsoft up 2.3% at 6:50 p.m., the QQQ ETF has risen 0.6% and the SPDR S&P 500 ETF had advanced 0.3%.

Now the Fed just has to keep from messing it all up.

Write to Ben Levisohn at ben.levisohn@barrons.com