Wall Street stocks fell on Thursday as markets were stunned by data showing weaker-than-expected U.S. economic growth and persistent inflation, as well as large-cap stocks selling off after Meta Platform’s disappointing results. Finished the transaction.
The Dow Jones Industrial Average fell 375.12 points, or 1%, to $38,085.12. It fell nearly 700 points in morning trading.
The S&P 500 and Nasdaq fell 0.5% and 0.6%, respectively.
Data on Thursday showed the U.S. economy grew at its slowest pace in nearly two years in the first quarter, while inflation accelerated and the Federal Reserve is set to cut interest rates later this year. My expectations for that were set back.
Meta plunged 11% after Facebook’s parent company predicted higher spending and lower-than-expected revenue.
Other growth stocks also came under pressure, with Alphabet, Amazon and Microsoft finishing lower.
“The GDP numbers definitely challenge the paradigm of markets clinging to stocks in terms of high growth. Without high growth, earnings will be lower than expected,” said California’s Sierra Mutual. said James St. Aubin, the fund’s chief investment officer.
Separately, the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, showing that labor market conditions remain tight.
“The double whammy was stronger-than-expected inflation, so there wasn’t really a silver lining in that report. Still positive in absolute terms, but compared to high expectations. It was disappointing,” St. Aubyn added.
The statistics were released on Friday ahead of the Personal Consumption Expenditures (PCE) index, the Fed’s preferred measure of inflation.
Money markets expect the Fed to cut interest rates by just about 36 basis points this year, down from about 150 basis points at the beginning of the year, according to LSEG data.
Other companies’ disappointing financial results also weighed on stock prices.
International Business Machines fell 8.3% after the company announced it would acquire Hashicorp in a deal worth $6.4 billion and first-quarter sales fell short of expectations.
Southwest Airlines fell 7% after lowering its forecast for new aircraft deliveries from Boeing for the third time in 2024 and saying it plans to take cost-cutting measures to cushion the resulting blow.
Caterpillar shares fell 7% after the company said it expects sales to decline in the second quarter as demand for construction equipment recedes from last year’s boom.
On the bright side, Newmont rose 12% after the world’s largest gold miner beat Wall Street expectations with first-quarter profit.