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 the biggest moves midday: Warner Bros. Discovery – Shares jumped 7% after Warner said it will split into two publicly traded companies by next year. One company will host WBD’s streaming services and movie properties, while the other will include its cable networks such as CNN and TNT Sports. Universal Health Services — The hospital operator fell more than 6% after CFO Steve Filton said at a conference that procedural volumes “have been slower to recover back to historical levels than we might have imagined.” He also raised concerns over how President Donald Trump’s spending bill could evolve as it goes through the Senate, and what that would mean for the hospital industry, according to a FactSet transcript. Topgolf Callaway Brands — The golf equipment stock rallied 8% following director Adebayo Ogunlesi’s disclosure on Friday that he had bought 383,700 shares. Following the transaction, Ogunlesi owns 512,600 shares. Quaker Chemical – The metal processing fluid company, which does business as Quaker Houghton, jumped 10%. On Monday, Jefferies upgraded the stock to buy from hold, seeing more than 33% upside on the back of improving steel demand conditions and increasing infrastructure spending. EchoStar – Shares tumbled 6% after the Wall Street Journal, citing people familiar, reported the telecommunications company is considering filing for bankruptcy under chapter 11 . The company is trying to protect its wireless spectrum licenses that are under review by the Federal Communications Commission, the report said. Apple — Shares of the iPhone maker are up slightly ahead of the company’s closely watched Worldwide Developers Conference in Cupertino, California . Investors are eager to hear more about Apple’s progress on Apple Intelligence, its response to generative AI models, at the meeting, which kicks off at 1 p.m. ET. Apple shares have lagged the market, with an 18% decline year to date. Robinhood , Applovin – Shares of Robinhood and Applovin fell 5% and 4%, respectively, after neither name was added to the S & P 500 on Friday. Both companies were considered possible candidates for inclusion in the index . Robinhood soared more than 13% last week leading up to the rebalance announcement, while Applovin advanced more than 6%. Intuitive Surgical — The surgical product maker slid 7% on the heels of Deutsche Bank’s downgrade to sell from hold. Deutsche said the company’s competitive moat is at risk. IonQ – The quantum computing stock climbed 2% after the company announced that it’s agreed to acquire Oxford Ionics in a deal valued at $1.075 billion in cash and stock. The deal is expected to close in 2025. Circle — Shares of the stablecoin issuer jumped 10%, continuing its post IPO surge . Circle’s stock is now nearly 300% above its $31 per share IPO price. McDonald’s – The fast-food chain’s stock slipped nearly 2% on the heels of a Morgan Stanley downgrade to equal weight from overweight. Morgan Stanley said the company hasn’t been insulated from pressures on the fast food sector. Moelis & Co. — Shares were more than 1% lower. On Monday, The Wall Street Journal reported that CEO Ken Moelis is planning to step down from the role at the investment bank. He said in an interview that he’s expected to become executive chairman, effective Oct. 1. Co-president Navid Mahmoodzadegan is slated to become CEO, the report said. Aon — Shares of the professional services company slipped 4% after Aon reaffirmed its full-year guidance during its investor day Monday. — CNBC’s Sean Conlon, Lisa Han, Alex Harring, Michelle Fox, Christina Cheddar Berk and Jesse Pound contributed reporting.
A Capital One Walmart credit card sign is seen at a store in Mountain View, California, United States on Tuesday, November 19, 2019.
Yichuan Cao | Nurphoto | Getty Images
Walmart‘s majority-owned fintech startup OnePay said Monday it was launching a pair of new credit cards for customers of the world’s biggest retailer.
OnePay is partnering with Synchrony, a major behind-the-scenes player in retail cards, which will issue the cards and handle underwriting decisions starting in the fall, the companies said.
OnePay, which was created by Walmart in 2021 with venture firm Ribbit Capital, will handle the customer experience for the card program through its mobile app.
Walmart had leaned on Capital One as the exclusive provider of its credit cards since 2018, but sued the bank in 2023 so that it could exit the relationship years ahead of schedule. At the time, Capital One accused Walmart of seeking to end its partnership so that it could move transactions to OnePay.
The Walmart card program had 10 million customers and roughly $8.5 billion in loans outstanding last year, when the partnership with Capital One ended, according to Fitch Ratings.
For Walmart and its fintech firm, the arrangement shows that, in seeking to quickly scale up in financial services, OnePay is opting to partner with established players rather than going it alone.
In March, OnePay announced that it was tapping Swedish fintech firm Klarna to handle buy now, pay later loans at the retailer, even after testing its own installment loan program.
One-stop shop
In its quest to become a one-stop shop for Americans underserved by traditional banks, OnePay has methodically built out its offerings, which now include debit cards, high-yield savings accounts and a digital wallet with peer-to-peer payments.
OnePay is rolling out two options: a general-purpose credit card that can be used anywhere Mastercard is accepted and a store card that will only allow Walmart purchases.
Customers whose credit profiles don’t allow them to qualify for the general-purpose card will be offered the store card, according to a person with knowledge of the program.
OnePay didn’t yet disclose the rewards expected with the cards, though the general-purpose card is expected to provide a stronger value, said this person, who declined to be identified speaking ahead of the product’s release. The Synchrony partnership was reported earlier by Bloomberg.
“Our goal with this credit card program is to deliver an experience for consumers that’s transparent, rewarding, and easy to use,” OnePay CEO Omer Ismail said in the Monday release.
“We’re excited to be partnering with Synchrony to launch a program at Walmart that checks each of those boxes and will help serve millions of people,” Ismail said.
Check out the companies making headlines before the bell. Warner Bros. Discovery – Shares jumped nearly 9% after Warner said it will split into two publicly traded companies by next year. One company will host WBD’s streaming services and movie properties, while the other will include its cable networks such as CNN and TNT Sports. Tesla – Shares of the electric vehicle maker dropped about 2% after Baird downgraded the stock to neutral from buy. The firm said that CEO Elon Musk’s comments on robotaxi plans are “a bit too optimistic” and that Musk’s relationship to President Donald Trump adds “considerable uncertainty.” EchoStar – Shares tumbled 11% after the Wall Street Journal, citing people familiar, said the telecommunications company is considering filing for bankruptcy under chapter 11 . The company is trying to protect its wireless spectrum licenses that are under review by the Federal Communications Commission, the report said. Robinhood , Applovin – Shares of Robinhood and Applovin each fell about 4% after neither name was added to the S & P 500 on Friday, as both names were considered possible candidates for inclusion in the index . Robinhood soared more than 13% last week leading up to the rebalance announcement, while Applovin advanced more than 6%. IonQ – The quantum computing stock gained more than 7% after the company announced that it’s agreed to acquire Oxford Ionics in a deal valued at $1.075 billion in cash and stock. The deal is expected to close in 2025. McDonald’s – The fast-food chain’s stock slipped nearly 1% on the heels of a Morgan Stanley downgrade to equal weight from overweight. Morgan Stanley said the company hasn’t been insulated from pressures on the fast food sector. Moelis & Co. – Shares were marginally lower. On Monday, The Wall Street Journal reported that CEO Ken Moelis is planning to step down from the role at the investment bank. He said in an interview that he’s expected to become executive chairman, effective Oct. 1. Co-president Navid Mahmoodzadegan is slated to become CEO, the report said. — CNBC’s Alex Harring, Fred Imbert and Sarah Min contributed reporting.
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