Wall Street Stocks Fall: Markets were stunned on Thursday by data showing slower-than-expected U.S. economic growth and persistent inflation, coupled with a sell-off in large cap stocks triggered by disappointing Meta Platforms (META.O) results.
According to data released on Thursday, the U.S. economy grew at its slowest pace in nearly two years during the first quarter, dampening expectations that the Federal Reserve would begin cutting interest rates this year.
Market sentiment was also affected by Meta’s disappointing results, whose shares plunged almost 11%.
There were also lower closes for Alphabet (GOOGL.O), Amazon.com (AMZN.O) and Microsoft (MSFT.O).
In extended hours trading, Alphabet and Microsoft saw their shares rise after both companies reported quarter-end results that beat Wall Street expectations. Shares of Intel (INTC.O) fell 8% in extended hours trading after Intel forecast revenue and profit below market estimates for the second quarter.
Communication stocks (.SPLRCL), open new tab, which were dragged down by Meta, were the biggest losers in the S&P 500 (.SPX), open new tab. Healthcare, real estate, financials, consumer staples, and consumer discretionary stocks also fell.
“The GDP numbers definitely put a dent in the paradigm that markets were hanging onto for equities in terms of high growth; and if you don’t have high growth, that will translate to lower-than-expected earnings,” said James St. Aubin, CEO of Sierra Mutual Funds in California.
Dow Jones Industrial Average (.DJI), opens new tab, fell 375.12 points, or 0.98%, to 38,085.80, S&P 500 (.SPX), opens new tab, lost 23.21 points, or 0.46%, to 5,048.42, and Nasdaq Composite (.IXIC), opens new tab, lost 100.99 points, or 0.64%, to 15,611.76.
Money markets expect the Fed to cut rates 36 basis points this year, down from 150 basis points at the start of the year.
The number of Americans seeking unemployment benefits unexpectedly dropped last week. The Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, will be released on Friday.
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“The double whammy was also the inflation number that came in stronger than expected so there wasn’t really a silver lining in that report; it’s still positive in absolute terms but relative to high expectations it was disappointing,” St. Aubin added.
International Business Machines (IBM.N) stock dropped 8% after it announced a $6.4 billion deal to buy HashiCorp (HCP.O).
Southwest Airlines (LUV.N) lowered its 2024 aircraft delivery projections for the third time in a row.
As construction equipment demand dwindled from last year’s boom, Caterpillar (CAT.N) shed 7% after cutting second-quarter sales forecasts.
Also Read: Meta Stock ($META) Falls Over 10% Despite Stronger Than Expected Q1 2024 Earnings Report
In the first quarter, Newmont(NEM.N), the world’s largest bullion miner, reported a profit that beat expectations. Its shares gained 12%.
On the NYSE, declining issues outnumbered advancers by 2.3-to-1. There were 72 new highs and 85 new lows. On the Nasdaq, 1,410 stocks rose and 2,819 fell as declining issues outnumbered advancers by 2-to-1.
As of Friday, the S&P 500 had 14 new 52-week highs and seven new lows, while the Nasdaq had 37 new highs and 203 new lows.
On U.S. exchanges, 10.7 billion shares were traded, compared to 11.07 billion on average over the past 20 days.
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