U.S. gross domestic product expanded 1.6% in the first quarter, the Bureau of Economic Analysis said. Economists polled by Dow Jones forecast GDP growth would come in at 2.4%.
Along with the downbeat growth rate for the quarter, the report showed the personal consumption expenditures price index increased at a 3.4% pace, well above the previous quarter’s 1.8% advance. This raised concern over persistent inflation and put into question whether the Federal Reserve will be able to cut rates anytime soon. Taken together, both findings suggest a stagflationary environment — that is, a combination of slowing economic growth and rising inflation — and could add another headwind for policymakers moving forward.
“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 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.
Following the GDP print, traders moved down expectations for an easing of Federal Reserve monetary policy. Fed funds futures trading data suggests there will be just one interest rate cut this year, according to the CME FedWatch Tool.
The lackluster GDP added further pressure to an already-tense market contending with concerns over a pullback in growth among technology earnings.
“For all of the attention given to generative AI in the past nine months, the failure of Meta to attain its revenue growth projections in Q1 is raising questions about whether the monetization of this technology is as easy as what traders were led to believe by management,” said ThierryWizman, global FX and rates strategist at Macquarie.
Meta’s report raises concern ahead of other big tech releases. Microsoft and Alphabet are slated to post earnings after the close Thursday.
Correction: An earlier version misstated the day’s move for the Nasdaq Composite.
4:11 p.m.: Stocks close lower, Dow slides more than 300 points
Stocks closed lower on Thursday, with gross domestic product data fueling growth concerns and pressuring equities.
The Dow Jones Industrial Average pulled back 375.12 points, or 0.98%, to close at 38,085.80. The S&P 500 slipped 0.46% to finish the session at 5,048.42, while the Nasdaq Composite lost 0.64% to 15,611.76.
— Brian Evans
3:30 p.m.: Investor bullishness below historical average for first time since early November
Individual investor bullishness toward the outlook for stock prices slid to 32.1% in the latest week, the lowest since early November, which was also the last time enthusiasm was below the historical average of 37.5%. That marked the end of 25 straight weeks when bullishness was above normal.
The weekly survey from the American Association of Individual Investors showed neutral sentiment regarding the next six months surged to 33.9% from 27.8%. The historical average is 31.5%.
Bearish opinion was little changed at 33.9% vs. 34.0% last week (and above an historical average of 31% for a second week).
— Scott Schnipper
3:01 p.m.: Federal Reserve is ‘boxed in a corner’ after GDP report, strategist says
The softer-than-expected GDP report puts the Fed in a bind with inflation readings heating up, said Mike Cornacchioli, Citizens Private Wealth senior VP for investment strategy.
“The GDP report was two-pronged: bad and ugly,” Cornacchioli said.
And while the GDP pricing data is just one way to look at inflation, the upward trendline is now becoming clear, Cornacchioli said.
“I think we’ve moved past seeing this uptick in inflation being transitory. It’s now a real concern, and continuing data is reinforcing that, which is what the PCE price data shows us. The Fed is kind of boxed in a corner here,” he added.
— Jesse Pound
2:34 p.m.: Stagflation fears are overblown, says BMO’s Yung-Yu Ma
Although GDP in the January-through-March period grew less than expected — while the inflation posted its biggest gain in a year — the economy is at little risk of falling into stagflation, according to BMO Wealth Management chief investment officer Yung-Yu Ma.
“We actually think growth is going to hold up pretty well,” Ma said. Much of the detractors of GDP growth were volatile one-time items, such as inventories, Ma noted, as well as underscoring strength in consumer and business spending.
“We see a pretty healthy and stable growth environment; we aren’t especially concerned about growth pulling back much throughout this year. We actually think there’s a good prospect for acceleration as we go throughout the year,” said Ma.
Ma forecasts prices for most services and goods to moderate in the remainder of 2024. “This GDP report might might actually mark a high point of worry for both inflation concerns and growth this year. We think both are going to turn the corner positive direction,” Ma said. “It might take a little bit of time, but we we don’t we don’t see these trends persisting throughout this year.”
With a forecast for a healthy growth environment, albeit a relatively neutral environment for inflation with regards to the Federal Reserve, Ma believes there is still a favorable backdrop for equities in 2024. “It’s not as favorable — but it’s still a backdrop that we wouldn’t recommend investors take an overly conservative or cautious stance in the face of this outlook,” Ma said.
— Hakyung Kim
1:30 p.m.: Tech investor stands by Meta Platforms, but says stock needs to ‘find support’
Technology investor Paul Meeks is standing by Meta Platforms despite Thursday’s sell-off, but said it’s too soon to snatch up shares just yet.
The stock needs to “find support for at least a few trading session, so I’m more confident that the short-term selling has been exhausted,” 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 to trickle in. This includes results from his favorite AI names Nvidia and Advanced Micro Devices.
— Samantha Subin
1:15 p.m.: Meta’s AI spending could benefit these stocks
Meta Platforms is down nearly 12% in midday training as investors react to the news that it will take a while to see the full benefits of the company’s rising investments in artificial intelligence. But one company’s loss could be another’s gain. As Meta’s spending could turn into bigger revenue at Super Micro, Arista Networks, Pure Storage, Broadcom and AMD, according to Wells Fargo.
Analyst Aaron Rakers estimates Meta was an approximately 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 last year’s revenue from Meta, he said.
Rakers also said Meta has been using Broadcom’s custom networking chips and was one of the first customers for its new AI chip, the MI300X.
Chip stocks were trading higher on Thursday, against the broader market’s steep decline.
—Kristina Partsinevelos, Christina Cheddar Berk
12:41 p.m.: Check out the stocks making headlines in midday trading:
Victoria’s Secret— Shares dropped 3.5% after Goldman Sachs initiated coverage of the stock with a sell rating, saying it sees a “tough macro and ongoing competitive pressure” for the lingerie company in the near term. Longer term, the firm is constructive on the company’s loyalty initiatives and renewed merchandise focus.
Meta Platforms— The Facebook-parent company plunged more than 11%. Meta reported lighter-than-expected second-quarter revenue guidance on Wednesday, and CEO Mark Zuckerberg spoke about spending in areas such as AI and mixed reality that are not currently profitable.
Tech stocks — Shares of major tech giants dropped on Thursday as Meta’s lackluster revenue outlook led to declines across the sector. Microsoft and Alphabet shares dropped roughly 3% and 2%, respectively, ahead of their earnings due after the bell. Amazon’s stock price shed 2%.
Monster Beverage— JPMorgan downgraded Monster Beverage to neutral from overweight due to “cost pressure,” pushing shares roughly 3% lower.
12:40 p.m.: Developed markets are showing signs of pressure from escalating geopolitical tensions, falling expectations of rate cuts and a recent equity sell off.
During the period, U.S. equity funds saw their third outflow in five weeks.
— Hakyung Kim
12 p.m.: Thursday sell-off pulls Dow into negative territory on the week
Thursday’s drop yanked the Dow below its flatline for the week, underscoring the magnitude of the daily loss.
The blue-chip average tumbled more than 1.5% in late morning trading. It was now down about 0.4% on the week, despite pacing for a gain of more than 1% heading into the session.
With that decline, the Dow sat within 0.5% of its flatline for 2024.
While the S&P 500 and Nasdaq Composite also fell in Thursday’s session, both remained on track to end the week higher. The broad S&P 500 was poised to finish up by 0.8%, while the technology-heavy Nasdaq was heading toward a 1% gain.
— Alex Harring
11: 24 a.m.: Chipmaker ETFs are a rare bright spot for investors Thursday
Semiconductor ETFs are performing well on Thursday even as the broader market struggles.
The VanEck Semiconductor ETF (SMH) was up about 0.7% on the session, while the Invesco PHLX Semiconductor ETF (SOXQ) was up about 0.9%.
The iShares Semiconductor ETF (SOXX) added about 0.5%.Nvidia was helping to lead the group higher, rising more than 2%. The chip giant had a 10% sell-off of its own last week, but is starting to claw back those losses.
— Jesse Pound
10:46 a.m.: IBM and Caterpillar lead Dow lower
The Dow has dived almost 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-stock index into the red, dropping more than 9% and 7%, respectively, on the back of earnings. Both missed analyst estimates for revenue in the quarter.
Big technology names Microsoft and Amazon were the next worst performers, shedding nearly 4% and 3%, respectively.
More than two out of every three Dow stocks traded down in the session. Merck, which reported better-than-anticipated earnings this morning, and UnitedHealth bucked the downtrend, with each up more than 1% in the session
— Alex Harring
10:22 a.m.: Meta shares on pace for worst day since October 2022
Meta Platforms shares plummeted 11.34% on Thursday. The losses put the stock on pace for its worst day since October 27, 2022, when Meta declined 24.56%.
Shares fell after Meta issued weak revenue guidance that overshadowed its better-than-expected earnings in the first quarter. The sell-off intensified following CEO Mark Zuckerberg’s comments on the company’s long-term investments in artificial intelligence and the metaverse.
— Hakyung Kim
10:04 a.m.: New York Stock Exchange decliners lead advancers 10-1
About 10 stocks traded lower at the New York Stock Exchange on Thursday for every one advancer, as the latest GDP report and new tech earnings dampened investor sentiment. Overall, 2,386 NYSE-listed stocks fell, while 210 advanced.
— Fred Imbert
9:52 a.m.: The U.S. GDP report was the ‘worst of both worlds,’ investor says
A disappointing U.S. GDP print could spell trouble ahead for the equity market if inflation continues to prove sticky, one investor said.
“This report was the worst of both worlds: economic growth is slowing and inflationary pressures are persisting,” wrote Chris Zaccarelli, investment chief at Independent Advisor Alliance.
“The Fed wants to see inflation start coming down in a persistent manner, but the market wants to see economic growth and corporate profits increasing, so if neither are headed in the right direction then that’s going to be bad news for markets,” he continued.
The data also raises the stakes for the personal consumption expenditures report that is set to release Friday. Investors are hoping the PCE report, which is the Fed’s preferred measure of inflation, will show an improvement in pricing pressures after the March consumer inflation report came in hotter than expected.
— Sarah Min
9:33 a.m.: Stocks fall after GDP data shows slowing economic growth
Stocks opened lower on Thursday, with equities selling off after fresh gross domestic product data signaled signs of slowing economic growth.
The Dow Jones Industrial Average pulled back 500 points, or 1.3%. The S&P 500 pulled back 1.4%, while the Nasdaq Composite lost 2.3%.
— Brian Evans
8:58 a.m.: 10-year Treasury yield jumps to highest level since November
Check out the companies making headlines in extended trading. Discover Financial – Shares inched lower by 1%. The financial services company posted third quarter results that surpassed expectations, with earnings of $3.69 per share on $4.45 billion of revenue. Analysts polled by LSEG were calling for earnings of $3.42 per share and revenue of $4.35 billion. CSX – The rail transportation company lost 4% after third quarter results fell short of Wall Street’s forecasts. CSX reported earnings of 46 cents per share on revenue of $3.62 billion, while analysts polled by LSEG anticipated 48 cents per share in earnings and revenue of $3.67 billion. Overall volumes were up 3% from the year-ago period, but revenue per unit was down about 1%. Alcoa – Shares of the aluminum producer jumped nearly 9%. Alcoa posted third quarter adjusted earnings of 57 cents per share, topping analysts’ estimate for 28 cents a share, per LSEG. Revenue missed the mark, coming in at $2.90 billion versus the Street’s call for $2.97 billion. Lucid Group – The electric vehicle maker slid 10% after announcing a public offering of more than 262 million shares. Lucid also said that Ayar Third Investment Company, an affiliate of the Public Investment Fund, indicated it would buy more than 374 million shares. Kinder Morgan — Shares of the energy infrastructure company fell 2.7% on disappointing third-quarter results. Kinder Morgan reported adjusted earnings per share of 25 cents and revenue of $3.70 billion. Meanwhile, analysts had estimated 27 cents earnings per share on $3.98 billion in revenue. Management also announced it expects to fall below budget on adjusted earnings before interest, taxes, depreciation, and amortization and adjusted earnings per share by 2% and 4%, respectively. PPG Industries — Shares slipped less than 1% after the paints manufacturer missed on both top and bottom lines in the third quarter. PPG Industries posted adjusted earnings of $2.13 per share on $4.58 billion in revenue. Analysts surveyed by LSEG had forecasted $2.15 earnings per share and revenue of $4.65 billion. A challenging global industrial production backdrop pressured the company’s results. SL Green – The office building-focused company tumbled around 3% after posting a revenue miss in the third quarter. SL Green reported $139.6 million in quarterly revenue, based on a rental income basis, while analysts polled by LSEG had expected $142.5 million. Meanwhile, losses came in at 21 cents per share versus the Street’s forecast of a 50-cent per share loss. Equifax — The consumer credit reporting company dropped nearly 5% after issuing weak guidance. In the fourth quarter, Equifax anticipates adjusted earnings of $2.08 to $2.18 per share, while analysts polled by LSEG sought $2.20 per share. The revenue outlook for the quarter also fell short of expectations. Steel Dynamics — The steel producer added 3%. Third quarter earnings came in at $2.05 per share, beating the $1.97 per share anticipated by analysts, per LSEG. Revenue also trounced expectations, with Steel Dynamics reporting $4.34 billion, versus the $4.18 billion estimated by the Street. — CNBC’s Darla Mercado contributed reporting
Check out the companies making headlines in midday trading. Novavax – Shares plunged more than 17% after the biotech company said the Food and Drug Administration put a clinical hold on its application for a Covid and influenza combination shot as well as a standalone flu vaccine. United Airlines – The stock soared 11% after the airline posted an earnings and revenue beat for the third quarter and guided for a strong fourth quarter. In addition, United said it is starting a $1.5 billion share buyback, its first since before the Covid pandemic. Morgan Stanley – Shares popped 7% after the bank reported quarterly results that beat Wall Street’s forecasts , boosted by higher profits from its wealth management, trading and investment banking divisions. The firm posted earnings of $1.88 per share, higher than the $1.58 expected by a LSEG analyst poll. Revenue was $15.38 billion versus the $14.41 billion consensus estimate. Cisco Systems – The technology networking stock advanced 3.3% to a 52-week high on the back of a Citi upgrade to buy from neutral. Citi said artificial intelligence can become a larger part of the business over time. Novocure – The stock rose 2.1% on the heels of the Food and Drug Administration’s approval of the company’s wearable treatment for metastatic non-small cell lung cancer, known as Optune Lua. ASML – Shares of the semiconductor equipment maker slumped 5.8%, building on a 16% loss from Tuesday after the Dutch company mistakenly released its third-quarter earnings earlier than expected . ASML Holding cut its sales outlook for 2025, citing a slower-than-expected recovery in segments beyond AI. J.B Hunt Transport Services – Shares added 3.4% after the company posted a top and bottom line beat. J.B. Hunt posted $1.49 earnings per share on $3.07 billion of revenue in the third quarter. Analysts polled by LSEG had forecast $1.41 in earnings per share on $3.02 billion of revenue. The company said demand for its intermodal service rose throughout the quarter. Aspen Aerogels – Shares gained 11% after the company announced that it received a conditional commitment for a proposed Department of Energy loan of up to $670.6 million. Aspen Aerogels also released preliminary results for the third quarter. For the period, the company is expecting revenue of around $117 million and adjusted EBITDA of around $25 million, above the $95.1 million in revenue and $14.1 million in adjusted EBITDA that analysts polled by FactSet were expecting. Prologis – The warehouse giant rose more than 4% after posting better-than-expected quarterly results . For the third quarter, Prologis reported core funds from operations of $1.43 per diluted share, above the $1.37 estimate from FactSet. In a statement, CEO Hamid Moghadam said: “Looking ahead, the supply picture is improving, and the long-term demand drivers for our business remain strong.” U.S. Bancorp – The stock moved more than 4% higher after U.S. Bancorp’s third-quarter earnings beat estimates, posting $1.03 per share versus the 99 cents per share that analysts were expecting, per LSEG. Revenue, however, missed estimates, coming in at $6.86 billion compared to the consensus estimate of $6.9 billion. General Motors – Shares increased more than 2% on the heels of the automaker’s agreement with Lithium Americas Corp. to establish a joint venture. The deal includes General Motors giving $625 million in cash and credit to the Canadian mining business. — CNBC’s Alex Harring, Hakyung Kim, Samantha Subin, Pia Singh and Michelle Fox contributed reporting.
Check out the companies making headlines before the bell. Cisco Systems — The networking technology stock added nearly 2% on the heels of a Citi upgrade to buy from neutral. Citi said artificial intelligence can become a bigger part of the business over time. Novocure — Shares soared roughly 22% after the U.S. Food and Drug Administration approved Novocure’s Optune Lua wearable treatment for metastatic non-small cell lung cancer. Morgan Stanley — Shares gained more than 3% after the bank reported quarterly results before the bell that beat Wall Street’s forecasts, helped by higher-than-expected revenue from its wealth management, trading and investment banking operations. The firm’s earnings came in at $1.88 per share, versus the $1.58 expected by a LSEG analyst poll. Revenue was $15.38 billion versus the $14.41 billion consensus estimate. United Airlines — Shares rose about 1% after the airline beat earnings and revenue expectations for the third quarter. United also announced a $1.5 billion share buyback, its first since before the pandemic. ASML — Shares of the Dutch chip equipment firm slid 4% before the bell, adding to Tuesday’s losses after it accidently released its third-quarter results a day early . The report was disappointing as ASML cut its 2025 sales forecast, suggesting weakness in markets other than those that serve AI applications. J.B Hunt Transport Services — Shares jumped more than 7% after the company’s third-quarter results topped expectations. J.B. Hunt posted $1.49 earnings per share on $3.07 billion of revenue. Analysts polled by LSEG had forecast earnings of $1.41 per share on $3.02 billion of revenue. The company said demand for its intermodal service rose throughout the quarter. — CNBC’s Sean Conlon, Alex Harring, Sarah Min, Michelle Fox and Hakyung Kim contributed reporting.