Investing.com– U.S. stocks traded sharply lower Thursday, with investors hit by a combination of slowing economic growth and disappointing second-quarter guidance from heavyweight tech giant Meta Platforms (NASDAQ:).
At 09:35 ET (13:35 GMT), the fell 460 points, or 1.2%, the fell 70 points, or 1.4%, and the slid 350 points, or 2.2%.
First-quarter US GDP growth disappoints
The grew by just 1.6% in the first quarter, on an annualised basis, according to data released earlier Thursday.
This represents a substantial fall from the 3.4% growth seen in the final quarter of 2023, and is below the 2.5% growth expected.
Wall Street indexes have started the second quarter in a negative fashion, with losses intensifying last week as signs of hot inflation and hawkish comments from the Federal Reserve saw traders price out most expectations for a June interest rate cut.
This GDP release is unlikely to persuade Fed officials to start the rate-cutting cycle as soon as June, given combating inflation has been their main agenda, but it could make a cut in the fall more likely.
This could depend on Friday’s data, as this is widely seen as the Federal Reserve’s favorite gauge of inflation.
Money markets are pricing in just about 42 basis points of rate cuts from the Fed this year, down from about 150 bps seen at the start of the year, according to LSEG data.
Meta slumps, drags down tech peers
In the corporate sector, Meta stock slid 14% to a near three-month low, after the Facebook parent forecast weaker-than-expected revenue for the second quarter due to higher spending on artificial intelligence.
The guidance largely offset stronger-than-expected first-quarter earnings, and set a dour tone for upcoming earnings from the company’s major technology peers – specifically Microsoft (NASDAQ:) and Alphabet (NASDAQ:).
Microsoft and Alphabet are set to report their first-quarter earnings after the bell on Thursday.
Social media stocks Snap (NYSE:) and Pinterest (NYSE:) also recorded sharp losses, tracking the decline in Meta.
IBM (NYSE:) slid 9% on weak first-quarter earnings, while the firm also announced a $6.4 billion deal to buy Hashicorp (NASDAQ:).
Caterpillar (NYSE:) stock fell 8% after the heavy machinery manufacturer reported a mixed first quarter of 2024, with earnings surpassing analysts’ expectations but revenue falling short.
On the other hand, Ford (NYSE:) rose 1% on strong first-quarter earnings and positive guidance, and Chipotle Mexican Grill (NYSE:) added 2.3% after it beat expectations with its first-quarter earnings.
Crude just higher as crude stockpiles slump
Oil prices edged higher Thursday, rebounding after the previous session’s losses as traders digested the latest growth and inventories data.
By 09:35 ET, the U.S. crude futures traded 0.1% higher at $82.91 a barrel, while the Brent contract climbed 0.1% to $88.13 a barrel.
Data from the U.S. Energy Information Administration on Wednesday showed that gasoline stockpiles fell less than forecast while distillate stockpiles rose against expectations of a decline, reflecting signs of slowing demand.
That said, plunged over six million barrels, when a build of around 1.6 million barrels had been expected.
Additionally, gold futures rose 0.4% to $2,328.60/oz, while EUR/USD traded 0.1% lower at 1.0687.
(Ambar Warrick contributed to this article.)
