Traders work during the opening bell at the New York Stock Exchange.
Johannes Eisele | AFP | Getty Images
Stocks fell sharply on Thursday after the latest US economic data showed a sharp slowdown in growth and pointed to persistent inflation.
The Dow Jones Industrial Average fell 631 points, or 1.7%, pressured by sharp declines in the sector 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, according to the Bureau of Economic Analysis. Economists consulted by Dow Jones predict that GDP growth will reach 2.4%.
Along with the dismal growth figure for the quarter, the report showed consumer prices rose 3.4%, well above the 1.8% increase in the previous quarter. This has raised concerns about persistent inflation and whether the Federal Reserve will be able to cut interest rates soon.
“In the short term, the numbers don't appear to be a green light for either bulls or bears. The uncertainty is unlikely to ease pressure in a market experiencing its deepest pullback since last year,” said Chris Larkin., managing director of trading and investing at Morgan Stanley's E*Trade.
Following the GDP pressure, traders have lowered their expectations for an easing of Federal Reserve monetary policy. Traders are now predicting just one rate cut this year, according to the CME FedWatch Tool.
Technical fall
The lackluster GDP added pressure to an already tense market facing concerns about a slowdown in technology revenue growth.
Meta fell 15% in premarket trading after the social media giant issued light revenue guidance for the second quarter. That 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 AI over the past nine months, Meta's inability to meet first-quarter revenue growth forecasts raises questions about whether monetizing this technology is as easy as what merchants are doing by management was led to believe. ,” Thierry said 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 publish earnings after the close on Thursday.
10:46 am: IBM and Caterpillar lead Dow lower
The Dow Jones plunged nearly 700 points in early Thursday trading, putting the blue chip average on track for its worst day this year.
IBM And Caterpillar led the 30-share index in the red, falling more than 9% and 7% respectively thanks to the earnings figures. Both missed analyst estimates for quarterly revenue.
Big tech names Microsoft and Amazon were the next worst performers, losing almost 4% and 3% respectively.
More than two in three Dow stocks fell during the session. Merck, which reported better-than-expected earnings this morning, and UnitedHealth broke the downtrend, each up more than 1% in the session
– Alex Harring
10:22 a.m.: Meta stocks on track for worst day since October 2022
Metaplatforms Shares plunged 11.34% on Thursday. The losses put the stock on track for its worst day since Oct. 27, 2022, when Meta fell 24.56%.
Shares fell after Meta issued weak revenue guidance that overshadowed better-than-expected first-quarter earnings. The selloff intensified after CEO Mark Zuckerberg's comments about the company's long-term investments in artificial intelligence and the metaverse.
Meta stocks on Thursday
10:04 a.m.: Decliners on the New York Stock Exchange are leading the advancers 10-1
About 10 stocks traded lower on the New York Stock Exchange on Thursday for every advance as the latest GDP report and gains from new technology dampened investor sentiment. A total of 2,386 NYSE-listed stocks fell, while 210 advanced.
– Fred Imbert
9:52 a.m.: US GDP report was the 'worst of both worlds,' says one investor
A disappointing U.S. GDP print could spell trouble for the stock market if inflation proves stubborn, one investor said.
“This report was the worst of both worlds: economic growth is slowing and inflationary pressures persist,” wrote Chris Zaccarelli, head of investments at Independent Advisor Alliance.
“The Fed wants to see inflation start to fall in a sustained manner, but the market wants to see economic growth and corporate profits rise, so if neither of these go in the right direction, that will be bad news for the markets,” continued he. .
The data also raises the stakes for the personal consumption expenditure report due Friday. Investors are hoping the PCE report, the Fed's preferred inflation measure, will show an improvement in price pressures after the March consumer inflation report came in warmer than expected.
– Sarah Min
9:33 am: Stocks fall after GDP data shows slowing economic growth
Stocks opened lower on Thursday, with stocks selling off after new gross domestic product data signaled 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.: Ten-year government bond yields jump to their highest level since November
The benchmark yield on government bonds reached a peak of 4.7% on Thursday.
While slowing economic growth could be a factor that could push the Federal Reserve toward rate cuts, rising prices from the GDP report could cause the central bank to hold rates steady until inflation subsides.
— Jesse Pond
8:51 a.m.: Gross domestic product has slowed in the first quarter
U.S. gross domestic product slowed in the first quarter, the Bureau of Economic Analysis said Thursday, hurting stock futures ahead of the opening bell.
GDP grew by 1.6% in the first quarter, while economists polled by Dow Jones forecast growth of 2.4%.
–Brian Evans