Investors saw major turbulence in the stock market as economic data released on Thursday showed a significant slowdown in growth and a rise in inflation, sparking concerns among traders. The Dow Jones Industrial Average dipped by 375.12 points, or 0.98%, ending the day at 38,085.80, dragged down by declines in prominent companies like Caterpillar and IBM. The S&P 500 also dropped by 0.46% to close at 5,048.42, while the Nasdaq Composite lost 0.64% to 15,611.76. This downturn comes as the U.S. gross domestic product expanded only 1.6% in the first quarter, falling short of the 2.4% forecasted by economists.
The report indicated that the personal consumption expenditures price index surged at a 3.4% pace, significantly higher than the previous quarter. This raised alarms about persistent inflation and threw into question the Federal Reserve’s ability to cut interest rates in the near future. The uncertainty surrounding these findings has hindered the market, intensifying its deepest setback since last year.
As the GDP print emerged, traders revised down their expectations for Federal Reserve monetary policy easing. Fed funds futures trading data indicates that there might be only one interest rate cut this year, based on the CME FedWatch Tool. This lackluster GDP performance further exacerbated concerns in an already tense market dealing with tech earnings growth pullbacks.
Meta, a social media giant, saw its stock plummet by 10.5% after providing light revenue guidance for the second quarter. Similarly, IBM experienced an 8.3% decline post missing consensus estimates for first-quarter revenue. Investors are now anxiously awaiting key tech earnings reports from Microsoft and Alphabet.
Overall, the mood in the market remains uncertain, with escalating fears around economic growth and inflation. Extreme Investor Network provides in-depth analysis and expert insights to help traders navigate these turbulent times. Stay ahead of the curve with our exclusive content and expert advice on investing in today’s challenging market landscape.
