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
A turbulent week in the U.S. Treasury market prompted the Treasury Department to sharply increase the size of its long-term debt buyback program, as bond prices fell even while equity markets pushed toward record highs. The divergence has drawn attention from fixed-income strategists who see it as a signal of underlying investor unease about federal borrowing levels.
What Happened This Week
U.S. Treasury Secretary Scott Bessent told CNBC on Thursday, August 20, 2026, that the Treasury had doubled the size of its long-term debt buyback operations, moving from roughly $2 billion to at least $4 billion per operation. Bessent indicated the figure could climb further, saying “we’re going to increase the size of the buyback,” and noted the accelerated pace could exceed the announced $4 billion threshold per issue.
Buybacks allow the Treasury to repurchase outstanding government bonds directly from the market, which can help support prices and dampen yield volatility during periods of stress. The expanded program came as stocks staged a late-week recovery: the S&P 500 and Russell 2000 both advanced on Friday, August 21, even as Treasuries logged mild losses, according to Bloomberg market data.
Why Bond and Equity Markets Are Diverging
Capital.com senior market analyst Daniela Hathorn described the week’s dynamic as markets “ending the week on a softer tone after the relative calm of early August was disrupted by renewed pressure in global bond markets, another rise in oil prices, and growing uncertainty around the Federal Reserve’s next move.” She noted that higher long-term borrowing costs are increasingly challenging elevated equity valuations, even as U.S. equities pull back modestly from record highs.
This divergence — equities near record levels while bonds sell off is unusual and reflects two different sets of investor concerns. Equity investors have remained focused on corporate earnings strength, particularly from large technology companies ahead of Nvidia’s closely watched August 26 earnings report. Bond investors, by contrast, are more directly exposed to concerns about the scale of federal borrowing, highlighted this week by the national debt crossing the $40 trillion threshold for the first time.
The Fed and Treasury “Working in Opposite Directions”
Wilmington Trust senior bond portfolio manager Wil Stith told Yahoo Finance that current conditions reflect “the Fed and the Treasury basically working in sort of opposite directions,” adding that the imbalance will likely require the Federal Reserve which he described as having “the larger sandbox” to adjust the federal funds rate rather than relying on Treasury market interventions alone to manage yields.
Notably, the bond market’s reaction to the Treasury’s buyback expansion was relatively muted; strategists described the move as being largely absorbed without a major rally, suggesting the underlying pressure on yields stems from factors, such as inflation persistence and debt sustainability concerns, that a buyback program alone cannot resolve.
What Comes Next
Markets are now looking to two major events in the days ahead: Nvidia’s earnings report on Wednesday, August 26, and the Federal Reserve’s Jackson Hole Economic Symposium, running August 27-29. This will be the first Jackson Hole gathering under new Fed Chair Kevin Warsh, whose public communication style and policy signals remain less established than his predecessors’, according to market commentary from Regards of Wall Street.
For investors, the key metrics to watch are the size and frequency of future Treasury buyback operations, movements in the 10-year Treasury yield, and any policy signals from Warsh’s keynote address. Continued yield volatility alongside record equity valuations would suggest the market imbalance identified this week has not yet been resolved.
The global banking system is undergoing a comprehensive modernization of cross-border payment infrastructure. Driven by real-time settlement networks, open banking APIs, and interoperable messaging standards, financial institutions and multinational corporations are eliminating multi-day delays and reducing transaction costs associated with legacy international wire transfers.
Transition to Real-Time Gross Settlement Networks
Historically, international business-to-business (B2B) payments relied on complex correspondent banking relationships involving intermediary fees and processing delays. In 2026, the widespread adoption of ISO 20022 messaging protocols alongside interconnected Real-Time Gross Settlement (RTGS) systems allows direct, end-to-end processing of cross-border transfers.
Commercial banks are providing corporate clients with continuous, 24/7 payment clearing capabilities. Real-time transaction confirmation and automated FX rate locking allow international businesses to settle cross-border trade obligations within minutes, significantly reducing counterparty risk.
Central Bank Digital Currency (CBDC) Interoperability
Wholesale Central Bank Digital Currency (CBDC) pilot initiatives are reaching operational maturity across several key financial centers. Collaborative multi-CBDC platforms enable participating central banks and commercial institutions to settle foreign exchange and international trade transactions directly on shared distributed ledgers.
These wholesale digital currency networks eliminate traditional clearinghouse delays and minimize foreign exchange slippage. Enterprise treasury departments benefit from enhanced liquidity management, as cross-border cash balances can be deployed and repatriated instantaneously.
Corporate Treasury Transformation
For enterprise treasurers, instant cross-border settlement transforms cash management strategies:
– Working Capital Optimization: Reduced transaction float allows companies to lower precautionary cash reserves and optimize short-term liquidity investments.
– Automated Reconciliation: Enriched data formats embedded in ISO 20022 payment messages streamline automated general ledger posting and invoice matching.
– Reduced Processing Overhead: Account-to-account (A2A) real-time clearing bypasses costly intermediary correspondent banking fees.
Strategic Financial Priorities
1. Upgrade Treasury Systems: Ensure internal core enterprise software supports real-time ISO 20022 payment messaging standards.
2. Leverage Instant Clearing Rails: Utilize direct payment networks to lower cross-border transaction fees and eliminate settlement delays.
3. Evaluate Multi-Currency Liquidity: Modernize liquidity management frameworks to capitalize on 24/7 real-time settlement capabilities.
The global private credit market has solidified its role as a fundamental pillar of enterprise finance, expanding rapidly across middle-market lending, asset-backed finance, and infrastructure financing. As non-bank financial institutions capture a larger share of corporate debt origination, global regulatory bodies are increasing oversight to evaluate market transparency and systemic risk interconnections.
Growth Drivers in Direct Lending
Direct lending platforms have continued to attract substantial institutional allocations from pension funds, sovereign wealth entities, and insurance companies seeking attractive risk-adjusted yields. Private debt funds offer corporate borrowers customized financing structures, faster execution timelines, and confidentiality compared to syndicated loan markets.
In 2026, private credit managers are increasingly financing larger corporate transactions, providing multi-billion-dollar credit facilities for buyout deals and corporate restructurings. The flexibility of private debt contracts—featuring unitranche pricing and tailored covenant packages—has made direct lending the preferred capital source for middle-market enterprise sponsors.
Regulatory Scrutiny and Systemic Risk Assessment
The rapid growth of non-bank intermediation has drawn heightened scrutiny from financial regulators in North America and Europe. Because private debt agreements are negotiated privately without public exchange disclosures, central banks are evaluating potential vulnerabilities related to asset valuation consistency and fund liquidity profiles.
Regulatory agencies are introducing guidelines aimed at improving reporting standards for private investment vehicles managing institutional assets. Key focus areas include monitoring leverage ratios within private credit funds and evaluating indirect credit exposures between commercial banking institutions and private debt funds.
Navigating Elevated Refinancing Costs
With benchmark interest rates remaining elevated, private debt borrowers face higher debt service obligations on floating-rate credit facilities. Financial advisory firms report an increase in proactive liability management strategies, including payment-in-kind (PIK) interest options, equity infusions from sponsors, and covenant modifications.
Private credit managers with deep operational capabilities are actively working alongside portfolio companies to optimize working capital and maintain cash flow coverage ratios during periods of higher borrowing costs.
Key Financial Takeaways
1. Mainstream Asset Class: Private credit has expanded beyond niche alternative asset status into a core corporate finance solution.
2. Enhanced Transparency Standards: Regulatory frameworks are evolving toward greater disclosure requirements for private debt managers.
3. Proactive Risk Management: Lenders and sponsors must prioritize debt sustainability and active portfolio monitoring amid high benchmark rates.
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