Traders work during the opening of the New York Stock Exchange.
Johannes Eisel | AFP | Getty Images
Stocks fell on Thursday after the latest U.S. economic data showed a sharp slowdown in growth and pointed to persistent inflation.
Dow Jones Industrial Average down 611 points, or 1.6%, as Caterpillar And IBM. S&P 500 Index fell by 1.3%, and Nasdaq Composite lost 1.7%.
U.S. gross domestic product rose 1.6% in the first quarter, the Bureau of Economic Analysis reported. Economists surveyed by Dow Jones forecast GDP growth to be 2.4%.
Along with the pessimistic growth rate for the quarter, the report showed that consumer prices rose 3.4%, significantly higher than the 1.8% rise in the previous quarter. That has raised concerns about persistent inflation and raised questions about whether the Federal Reserve will be able to cut rates anytime soon.
“In the short term, these numbers don’t appear to give the green light to either bulls or bears… the uncertainty is unlikely to ease pressure in a market suffering its deepest downturn since last year,” Chris Larkin said., managing director of trading and investing at E*Trade from Morgan Stanley.
After the GDP release, traders lowered their expectations for an easing of monetary policy by the Federal Reserve. Fed funds futures trading data suggests there will only be one interest rate cut this year, according to the CME FedWatch Tool.
Technical failure
Weak GDP added pressure to an already tight market grappling with concerns about slowing technology revenue growth.
Meta fell 13% after the social media giant issued modest revenue guidance for the second quarter. 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 paid to generative artificial intelligence over the past nine months, Meta’s failure to meet first-quarter revenue growth guidance raises questions about whether monetizing the technology is as easy as what management led traders to believe. ,” said Thierry Wiseman is global FX and rates strategist at Macquarie.
Meta’s report raises concerns ahead of other major technology releases. Microsoft And Alphabet plan to report earnings after the close on Thursday.
Chipmaker ETF a rare bright spot for investors Thursday
Semiconductor ETFs performed well on Thursday despite difficulties in the broader market.
The VanEck Semiconductor ETF (SMH) was up about 0.7% on the session, while the Invesco PHLX Semiconductor ETF (SOXQ) was up about 0.9%.
The iShares Semiconductor ETF (SOXX) gained about 0.5%. NVIDIA helped the group climb higher, rising more than 2%. The chip giant had a 10% selloff last week, but is starting to recoup those losses.
— Jesse Pound
10:46: IBM and Caterpillar lead the Dow down
The Dow Jones Industrial Average fell nearly 700 points in early trading Thursday, putting the blue-chip index on track for its worst day this year.
IBM And Caterpillar drove the 30-stock index into negative territory, falling more than 9% and 7%, respectively, on the back of earnings. Both companies missed analysts’ revenue estimates for the quarter.
The next worst performers were tech majors Microsoft and Amazon, down nearly 4% and 3%, respectively.
More than two out of every three Dow stocks traded lower during the session. Merck, which reported better-than-expected earnings this morning, and UnitedHealth bucked the downtrend with each up more than 1% on the session.
— Alex Harring
10:22: Meta stocks have their worst day since October 2022
Meta platforms shares fell 11.34% on Thursday. The losses led to the stock’s worst day since October 27, 2022, with Meta falling 24.56%.
Shares fell after Meta issued weak revenue guidance that dwarfed its better-than-expected first-quarter profit. The sell-off intensified following comments from CEO Mark Zuckerberg about the company’s long-term investments in artificial intelligence and the metaverse.
Thursday Meta Stocks
10:04 a.m.: The New York Stock Exchange’s decline outpaces its rise by 10-1.
About 10 stocks traded lower for every gainer on the New York Stock Exchange on Thursday as the latest GDP report and technology gains dampened investor sentiment. Overall, 2,386 NYSE-listed stocks fell and 210 rose.
— Fred Imbert
9:52 am: US GDP report was ‘worst of both worlds’, investor says
Disappointing US GDP data could portend future troubles for the stock market if inflation remains stubborn, one investor said.
“This report was the worst of both worlds, with economic growth slowing and inflation pressures remaining,” wrote Chris Zaccarelli, head of investment for the Independent Advisor Alliance.
“The Fed wants inflation to begin a steady decline, but the market wants to see economic growth and higher corporate profits, so if neither of those move in the right direction, it will be bad news for markets,” he continued. .
The data also raises the stakes for the personal consumption expenditure report due Friday. Investors are hoping the PCE report, the Fed’s preferred measure of inflation, will show an improvement in price pressures after the March consumer inflation report was hotter than expected.
— Sarah Min
9:33: Stocks fall after GDP data shows economic growth slowing
Stocks opened lower on Thursday, with stocks selling off after fresh gross domestic product data signaled signs of slowing economic growth.
The Dow Jones Industrial Average retreated 500 points, or 1.3%. The S&P 500 fell 1.4% and the Nasdaq Composite lost 2.3%.
— Brian Evans
8:58 a.m.: The 10-year Treasury yield jumped to its highest level since November.
On Thursday, the benchmark Treasury rate rose above 4.7%.
While slowing economic growth could be a factor that pushes the Federal Reserve to cut rates, rising prices shown in the GDP report could force the central bank to keep rates steady until inflation subsides.
— Jesse Pound
8:51 a.m.: Gross domestic product slowed in 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 rose 1.6% in the first quarter, while economists polled by Dow Jones forecast growth of 2.4%.
— Brian Evans