Proactive Investors -
- GDP figures stem interest rate fears
- Meta sinks 11%
- Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) to report after close
4:15pm: Stocks slide as US GDP misses expectations
Stocks experienced declines on Thursday following a disappointing report on US GDP growth for the first quarter, raising concerns about the strength of the economy amid persistently high interest rates.
The Nasdaq Composite fell approximately 0.6%, the S&P 500 lost around than 0.5%, and the Dow Jones Industrial Average slipped about 1%, or nearly 400 points, although they rebounded slightly from earlier lows.
Treasury yields surged after the GDP print, with the benchmark 10-year yield reaching its highest levels of the year.
Meta's revenue forecast sent shockwaves through the tech sector, as the company's shares plummeted more than 10% due to rising costs and concerns about the timeline for revenue growth and dragged tech giants like Microsoft, Alphabet, and Amazon (NASDAQ:AMZN) down.
Looking ahead, investors are closely monitoring the upcoming release of the Personal Consumption Expenditures index, the Fed's preferred inflation measure, as well as a wave of corporate earnings reports from companies like Microsoft, Alphabet, and Intel (NASDAQ:INTC).
1.58pm: US stocks remain lower
Wall Street has improved slightly but remains down after fears of interest rates lifted on GDP figures.
The Dow Jones is around 326 points down at 38,134, while the Nasdaq dropped 108 points to 15,606.
The S&P 500 is continuing to fare the best of the three, down 21 points, or 0.4%, at 5,050.
While a sharp fall in share price from Meta continues to grab a large portion of investor attention several other shares have also slumped lower.
Victoria's Secret (NYSE:VSCO) dropped close to 4% after Goldman Sachs (NYSE:GS) analysts commenced their coverage of the stock with a sell rating.
Monster Beverage (NASDAQ:MNST) fell 2.5% after JPMorgan (NYSE:JPM) downgraded the stock to neutral due to pressure on costs.
Looking forward, tech megacaps Alphabet and Microsoft are due to report when trading ends for the day.
The Google owner is expected to surpass Street expectations, particularly in its search and YouTube segments, according to Bank of America (NYSE:BAC).
12.02pm: Wall Street takes hammering
US stocks are taking a hammering as markets head to lunch, with poor GDP figures reigniting fears about interest rates staying at elevated levels for longer.
All three of Wall Street's lead indexes tumbled, with the Dow Jones and Nasdaq both sinking around 1.6%.
The S&P 500 fared slightly better, dropping 1.1%, or 59 points to 5,012.
“In the short term, [GDP] numbers don’t appear to be a green light for either bulls or bears...the uncertainty is unlikely to ease pressures in a market experiencing its deepest pullback since last year,” said Chris Larkin, managing director of trading and investing at E*Trade from Morgan Stanley (NYSE:NYSE:MS) (Morgan Stanley (NYSE:MS)).
Investors will now turn their focus to tomorrow's inflation reading, which will provide further insight into how inflation is faring and what the Fed's plan may look like.
Despite the negativity surrounding interest rates, Thursday saw another swathe of companies report.
Meta, which posted results on Wednesday night, saw its shares tumble around 13%, while IBM (NYSE:IBM) and Caterpillar (NYSE:CAT) dropped 10% and 7% respectively.
At the close, both Microsoft and Google's Alphabet will report.
9.51am: Wall Street sees red
Wall Street sunk into the red as trading got underway on Thursday after gross domestic product data (GDP) showed slowing growth over the first three months of the year.
GDP climbed by 1.6% over the first quarter, against 3.4% during the final three months of last year and below market expectations for a 2.4% increase.
The Nasdaq dipped 329 points to 15,383 on the news, while the Dow Jones lost 531 points to go to 37,929 and the S&P 500 slipped 71 points to 4,999.
Validus Risk Management’s Ryan Brandham noted the GDP figure was “particularly surprising given the perceived strength of the economy”.
He added: “Despite this, price components came in higher than expected.
“This combination of slower growth alongside higher prices is worrying. If higher prices persist, the Fed will find it hard to cut rates to support growth.”
Almost $200bn wiped of Meta’s value
Adding pressure on Thursday was a near 14% drop in Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB)’s share price after a first-quarter trading update on Wednesday evening disappointed.
This equated to almost US$200 billion lost from Meta’s market cap, as investors appeared to flee over higher-than-expected spending on artificial intelligence and full-year guidance.
7.06am: Wall Street facing tough start
Wall Street looked to be dragged lower by a slump in Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB) shares overnight after the technology giant disappointed with guidance in Wednesday’s first quarter update.
Shares in the Facebook (NASDAQ:META) and Instagram owner were down 14% in pre-market trading after Meta said spending on artificial intelligence would be higher than expected for the year, while revenue would sit between $36.5-$39 billion, against consensus of $38.5 billion.
Futures had The Dow Jones falling 222 points on Thursday’s open following the news, while the Nasdaq and S&P 500 looked to fall 167 and 31 points respectively.
“This highlights how pre-release performance and the company’s outlook are often more important than the numbers themselves,” Scope Markets analyst Joshua Mahony said on Meta’s earnings.
“All eyes turn towards Microsoft and Alphabet whose numbers are released after the close today,” he added.
Also on the cards for Thursday was US gross domestic product data, with markets expecting growth of 2.5% over the first quarter.