Traders work on the New York Stock Exchange trading floor during afternoon trading on April 9, 2024.
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Stock index futures fell sharply on Thursday after the latest U.S. economic data showed a sharp slowdown in economic growth and pointed to persistent inflation.
Futures linked to the Dow Jones Industrial Average It fell 419 points or 1.1%. S&P 500 Index Futures fell 1.1%, and Nasdaq 100 Futures down 1.5%. Treasury yields have also surged, with the benchmark 10-year Treasury yield rising above 4.7%, the highest level since November.
The U.S. Bureau of Economic Analysis said U.S. gross domestic product grew 1.6% in the first quarter. Economists surveyed by Dow Jones forecast GDP growth of 2.4%.
The report showed that in addition to the sluggish growth rate this quarter, consumer prices rose by 3.4%, much higher than the 1.8% increase in the previous quarter. That has raised concerns about persistent inflation and questions whether the Federal Reserve will be able to cut interest rates anytime soon.
Quincy Crosby, chief global strategist at LPL Financial, said: “Weak first-quarter GDP data may once again change the Fed’s timetable for starting the interest rate cutting cycle, with July coming back into play.” “If Tomorrow’s Personal Consumption Expenditure report also shows that downward inflation momentum has begun to show again, so it may become a catalyst for the market.“.
After the GDP data was released, traders lowered their expectations for the Federal Reserve to ease monetary policy.Traders now expect just one rate cut this year, according to the agency CME FedWatch Tool.
Tech stocks plunge
The sluggish gross domestic product (GDP) added further pressure to already nervous markets, which are battling concerns about slowing technology profit growth.
Yuan The company plunged 12% in premarket trading after the social media giant issued second-quarter revenue guidance. This would be the stock’s biggest one-day drop since October 2022. international business machine The company also fell 8% after missing consensus first-quarter revenue estimates.
“Despite all the attention paid to generative artificial intelligence over the past nine months, Meta’s failure to meet first-quarter revenue growth forecasts raises questions about whether monetizing the technology will be as manageable as management guided traders It’s as easy as you think,” Thierry says Wizman, global FX and rates strategist at Macquarie
Meta’s report drew attention ahead of other big tech releases. Microsoft and letter Earnings are scheduled to be released after the market close on Thursday.
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