Stocks fell on Thursday following disappointing US GDP figures for the first quarter, intensifying concerns about the economy amid soaring interest rates.
The market saw a significant downturn, with the Nasdaq Composite leading the decline by approximately 1.4%. The S&P 500 and the Dow Jones Industrial Average also experienced losses, dropping 1.3% and 1.6%, respectively.
Disappointing US GDP Growth: The US GDP growth rate for the first quarter came in at 1.6% on an annualized basis, falling well below the anticipated 2.5%. This shortfall raised doubts about the trajectory of the economy, particularly in light of ongoing discussions about the Federal Reserve’s interest rate strategy.
Rising Treasury Yields: Following the disappointing GDP figures, Treasury yields surged to their highest levels of the year. The benchmark 10-year yield reached around 4.73%, reflecting investors’ concerns about inflation and future interest rate hikes.
Meta’s Revenue Miss: Meta, the parent company of Facebook and Instagram, experienced a significant drop in its stock price, plummeting as much as 15%. Investors were unsettled by the company’s revenue forecast miss and its plans to invest up to $10 billion in AI infrastructure. The uncertainty surrounding the timeline for these investments to translate into revenue weighed on the broader tech sector. Microsoft, Alphabet, and Amazon all saw declines of more than 3%.
Caterpillar’s Weak Outlook: Caterpillar, a heavy equipment manufacturer, reported a more than 7% decline in its stock price after indicating ongoing challenges in Europe and economic softening in the Asia-Pacific region (excluding China).
Eyes on Inflation Data: Investors are eagerly awaiting the release of the March reading of the Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge. The report, scheduled for Friday, will provide insights into inflationary pressures, which could influence the Fed’s future monetary policy decisions.
Thursday’s market decline underscores the fragility of investor sentiment amid concerns about economic growth and rising interest rates. Disappointing US GDP figures, coupled with Meta’s revenue miss and Caterpillar’s weak outlook, contributed to the negative sentiment. As investors await further economic data, particularly inflation figures, market volatility is likely to persist in the coming days.
