Traders work during the opening bell of the New York Stock Exchange.
Johannes Eisele | AFP | Getty Images
Stocks fell sharply on Thursday after the latest U.S. economic data showed a sharp slowdown in growth and highlighted persistent inflation.
THE Dow Jones Industrial Average slipped 631 points, or 1.7%, weighed down by sharp declines caterpillar And IBM. THE S&P500 fell by 1.2%, and the Nasdaq Composite lost 1.4%.
U.S. gross domestic product grew 1.6% in the first quarter, the Bureau of Economic Analysis said. Economists surveyed by Dow Jones forecast GDP growth of 2.4%.
Along with the quarter’s slow growth rate, the report shows that consumer prices rose at a pace of 3.4%, much higher than the 1.8% increase in the previous quarter. This has raised concerns about continued inflation and called into question the Federal Reserve’s ability to cut rates in the near future.
“In the short term, the numbers do not appear to be a green light for either bulls or bears…uncertainty is unlikely to ease pressures in a market that is experiencing its deepest decline since last year ” said Chris Larkin., Managing Director of Trading and Investments at E*Trade at Morgan Stanley.
Following the GDP release, traders lowered their expectations for an easing of the Federal Reserve’s monetary policy. Traders now expect just one interest rate cut this year, according to the CME FedWatch tool.
Technological fall
The sluggish GDP added further pressure to an already tight market facing concerns about a decline in technology earnings growth.
Meta plunged 15% in pre-market trading after the social media giant issued weak second-quarter revenue guidance. This would be the stock’s biggest one-day drop since October 2022. International Business Machines also fell 8% after missing consensus estimates for first-quarter revenue.
“Despite all the attention given to generative AI over the past nine months, Meta’s failure to meet its first-quarter revenue growth guidance raises the question of whether monetizing this technology is as simple as what management led traders to believe. ,” said Thierry Wizman, global FX and rates strategist at Macquarie.
Meta’s report raises concerns ahead of other major tech releases. Microsoft And Alphabet are expected to report earnings after Thursday’s close.
10:22 a.m.: Meta stocks on track for worst day since October 2022
Metaplatforms shares fell 11.34% on Thursday. The losses put the stock on track for its worst day since October 27, 2022, when Meta fell 24.56%.
Shares fell after Meta issued weak revenue guidance that overshadowed its better-than-expected first-quarter earnings. The sell-off intensified following comments from CEO Mark Zuckerberg about the company’s long-term investments in artificial intelligence and the metaverse.
Meta share Thursday
10:04 a.m.: New York Stock Exchange decliners lead advancers 10-1
About 10 stocks traded lower on the New York Stock Exchange on Thursday for every gain, as the latest report on GDP and new technology earnings dampened investor confidence. A total of 2,386 NYSE-listed stocks fell, while 210 rose.
—Fred Imbert
9:52 a.m.: US GDP report was ‘the worst of both worlds’, says investor
A disappointing US GDP figure could spell trouble in the stock market if inflation continues to prove stubborn, one investor said.
“This report is the worst of both worlds: economic growth is slowing and inflationary pressures persist,” wrote Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
“The Fed wants to see inflation start to fall persistently, but the market wants to see economic growth and corporate profits rise, so if neither goes in the right direction, it will be a bad news for the markets,” he continued. .
The data also raises the stakes for the personal consumption expenditures report expected to be released Friday. Investors are hoping the PCE report, which is the Fed’s preferred inflation measure, will show improving price pressures after the March consumer inflation report was hotter than expected.
-Sarah Min
9:33 a.m.: Stocks fall after GDP data shows slowing economic growth
Stocks opened lower on Thursday, with shares selling off after new gross domestic product data pointed to signs of slowing economic growth.
The Dow Jones Industrial Average fell 500 points, or 1.3%. The S&P 500 fell 1.4%, while the Nasdaq Composite lost 2.3%.
—Brian Evans
8:58 a.m.: 10-year Treasury yield hits highest level since November
The benchmark Treasury rate rose above 4.7% on Thursday.
Although slowing economic growth could be a factor pushing the Federal Reserve to cut rates, the rising prices shown in the GDP report could lead the central bank to keep rates steady until inflation backs up.
—Jesse Book
8:51 a.m.: Gross domestic product slows in the first quarter
U.S. gross domestic product slowed in the first quarter, the Bureau of Economic Analysis said Thursday, weighing on stock futures ahead of the opening bell.
GDP grew 1.6% in the first quarter, while economists surveyed by Dow Jones forecast growth of 2.4%.
—Brian Evans
cnbc
