Dow falls on inflation and growth concerns, Meta falls

Stocks tumbled 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 340 points, or 0.8%, under pressure from steep declines Caterpillar And IBM. The S&P500 fell by 0.4%, and the Nasdaq Composite lost 0.7%.

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. Taken together, both findings indicate a stagflationary environment – ​​that is, a combination of slowing economic growth and rising inflation – and could create further headwinds for policymakers.

“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. Fed Funds futures trading data suggests there will be only one rate cut this year, according to the CME FedWatch Tool.

The lackluster GDP added pressure to an already tense market facing concerns about a slowdown in technology revenue growth.

Meta fell 11% 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.

Correction: An earlier version misstated the Nasdaq Composite’s movement.

1:30 p.m.: Tech investor backs Meta Platforms, but says shares ‘need to find support’

Technology investor Paul Meeks is ready Metaplatforms despite Thursday’s sell-off, but said it’s still too early to grab shares.

The stock “needs to find support for at least a few trading sessions, so I feel more confident that the selling has been exhausted in the near term,” said the co-chief investment officer and portfolio manager at Harvest Portfolio Management.

Meeks considers himself a long-term owner of the stock, but said he’s waiting for more earnings reports. This also includes the results of his favorite AI names. Nvidia And Advanced micro devices.

-Samantha Subin

1:15 p.m.: Meta’s AI spending could benefit these stocks

Metaplatforms is down nearly 12% during the afternoon workout, as investors react to news that it will be a while before the full benefits of the company’s increasing investments in artificial intelligence are seen. But one company’s loss can be another company’s gain. According to Wells Fargo, Meta’s spending could lead to bigger revenues at Super Micro, Arista Networks, Pure Storage, Broadcom and AMD.

Analyst Aaron Rakers estimates that Meta was a roughly 10% customer for Super Micro in the fourth quarter of 2023, and for Pure Storage last year.

Arista Networks, which makes Ethernet-based AI cables and other products, received about 21% of Meta’s revenue last year, he said.

Rakers also said Meta uses Broadcom’s custom networking chips and was one of the first customers for its new AI chip, the MI300X.

Chip stocks traded higher on Thursday despite the steep decline in the broader market.

– Kristina Partsinevelos, Christina Cheddar Berk

12:41 p.m.: See the stocks making headlines in afternoon trading:

• Victoria’s secreta -€” Shares fell 3.5% after Goldman Sachs rated the stock with a sell rating, saying it sees “heavy macroeconomic and continued competitive pressure” on the lingerie company in the near term. Longer term, the company is constructive on the company’s loyalty initiatives and renewed focus on merchandise.
• Metaplatformsa -€” The Facebook parent company plummeted more than 11%. Meta reported lighter-than-expected second-quarter revenue guidance on Wednesday, and CEO Mark Zuckerberg talked about spending in areas like AI and mixed reality that aren’t currently profitable.
• Technology Stocks – Shares of major tech giants fell on Thursday after Meta’s lackluster revenue outlook led to industry-wide declines. Microsoft And Alphabet Shares fell about 3% and 2%, respectively, higher than their gains after the bell. from Amazon The share price fell by 2%.
• Monstrous drinka -€” JPMorgan cut Monster Beverage’s rating to neutral from overweight due to “cost pressures,” pushing the shares down about 3%.

For the full list you can read here.

-Pia Singh

12.40pm: Developed markets are showing signs of pressure from escalating geopolitical tensions, declining expectations of rate cuts and a recent equity sell-off.

All important ones EPFR-tracked Developed Markets Equity Fund groupsexcluding Canada Equity Funds, saw net redemptions in the week ending April 17, according to EPFR.

During this period, US stock funds saw their third outflow in five weeks.

-Hakyung Kim

12:00 PM: Sell-off on Thursday puts Dow in negative territory this week

Thursday’s decline took the Dow Jones below its flat line for the week, underscoring the magnitude of the daily loss.

The blue chip average fell more than 1.5% in late morning trading. It is now down around 0.4% for the week, despite expecting a gain of more than 1% heading into the session.

That drop kept the Dow Jones within 0.5% of its 2024 flat line.

Although the S&P 500 and Nasdaq Composite also fell during Thursday’s session, both remained on track to end the week higher. The broad-based S&P 500 was set to end up 0.8%, while the tech-heavy Nasdaq was on track for a 1% gain.

-Alex Harring

11:24 a.m.: Chipmaker ETFs are a rare bright spot for investors on Thursday

Semiconductor ETFs are performing well on Thursday even as the broader market struggles.

The VanEck Semiconductor ETF (SMH) rose about 0.7% on the session, while the Invesco PHLX Semiconductor ETF (SOXQ) rose about 0.9%.

The iShares Semiconductor ETF (SOXX) rose about 0.5%. Nvidia helped the group move higher, rising by more than 2%. The chip giant had its own 10% selloff last week, but is starting to claw back those losses.

-Jesse Pound

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.

-Hakyung Kim

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 Interest on 10-year government bonds followed the GDP report above 4.7%, reaching the highest level since November.

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 Pound

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