Wall Street stocks fall as weak GDP growth spreads gloom over rate cuts From Reuters

Chibuike Ogu

NEW YORK (Reuters) – Wall Street shares fell on Thursday as markets were stunned by data showing slower-than-expected U.S. economic growth and persistent inflation coupled with a sell-off in large-cap stocks driven by disappointing results from Meta Platforms ( NASDAQ: ).

Data on Thursday showed the U.S. economy grew at its slowest pace in nearly two years in the first quarter while inflation accelerated, dampening hopes that the Federal Reserve will begin cutting interest rates this year.

Meta’s disappointing results, which fell 11%, are also weighing on market sentiment. Shares of three other Magnificent Seven companies, including Alphabet (NASDAQ:), Amazon.com (NASDAQ:) and Microsoft (NASDAQ:), also fell between 1.8% and 2.7%.

Telecommunications stocks, which were dragged down by Meta, are now suffering their biggest losses of 2019 and are on track for their biggest one-day drop since October. Other stock categories are losing ground in real estate, consumer staples, financials, healthcare and consumer staples.

Alphabet, Microsoft and Intel (NASDAQ:) are scheduled to release their quarterly results on Thursday after markets close.

“The GDP numbers certainly challenge the paradigm that markets have held for equities in terms of high growth; and if you don’t have high growth rates, that will lead to lower-than-expected earnings,” James St. Aubin said. , chief investment officer of Sierra Mutual Funds in California.

At 2:57 p.m., down 468.28 points, or 1.21%, at 37,993.75, the S&P 500 was down 35.07 points, or 0.69%, at 5,036.56, also down 146.69. , or 0.93%, to 15,566.06.

Money markets expect the Fed to cut rates by about 36 basis points this year, down from about 150 basis points seen at the start of the year, according to LSEG data.

In addition, the number of Americans filing new claims for unemployment benefits fell unexpectedly last week, indicating still tough labor market conditions. The March Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation gauge, will be released on Friday.

“In a double blow, the inflation figure was stronger than expected, so there was no silver lining to this report; it is still positive in absolute terms, but disappointing relative to high expectations,” St. Aubin added.

International Business Machines (NYSE:) shares fell 8.4% after the company announced a $6.4 billion deal to acquire HashiCorp (NASDAQ:) and reported first-quarter results in which revenue fell short of expectations.

Southwest Airlines (NYSE:) shares fell 9.1% as the carrier cut its forecast for new aircraft deliveries from Boeing (NYSE:) in 2024 for the third time.

Caterpillar (NYSE:) fell 6.4% after the company cut its sales forecast for the second quarter as demand for its construction equipment slowed after last year’s boom.

Rising gold prices helped Newmont, the world’s largest bullion miner, report first-quarter profit that beat forecasts. Its shares rose almost 13%.

Declining issues outnumbered advancing ones on the NYSE by a ratio of 2.66 to 1. There were 56 new highs and 76 new lows on the New York Stock Exchange. On the Nasdaq, 1,341 stocks rose and 2,765 fell as decliners outnumbered advancers by a 2.06-to-1 ratio.

The S&P 500 posted 13 new 52-week highs and seven new lows, while the Nasdaq posted 33 new highs and 183 new lows.