Microsoft (MSFT -1.01%) stock was a bit of a see-saw on Wednesday, at one point rising by more than 2% over Tuesday's close before settling down to end the day 1.4% lower. The swing between Wednesday's highest and lowest share prices was 3.7%. There were understandable reasons for both the advance and the retreat; at the end of the day, though, the negative dynamics outweighed the positive for Microsoft investors.
On the plus side, investors were still basking in the glow of Tuesday morning's announcement that Microsoft is enacting a meaty dividend raise of 10%. The company, ever a cash-generating machine, has plenty of dosh to devote to the increase, so there's little to no concern that the lift will strain the finances.
The bull case for Microsoft stock was bolstered by analyst Keith Weiss of Morgan Stanley (MS 2.17%).
Before the market open on Wednesday, Weiss reiterated his overweight (i.e., buy) recommendation on the shares at a price target of $354 per share -- which implies a potential upside of nearly 50% to its current level. The prognosticator is, of course, happy about the dividend raise but also believes the company can grow revenue in the mid-teen percentages over the next few years.
So Microsoft is a successful company with potential that is making notable improvements to its dividend. Why the negativity? This is due in no small part to the fact that it's a tech company, and a bellwether at that.
Many investors consider the sector particularly vulnerable to the anticipated economic slowdown. That's because many businesses and not a few individuals frequently cut tech spending as one of their first batten-down-the-hatches moves when the economy sputters.
Additionally, investors often bail out of tech stocks (even the major ones) in favor of assets considered to be safer during such times. Considering that, we should expect the wariness of the sector to continue, barring any positive signs for the global economy. Microsoft will surely continue to be affected by this.