Dow Jones and major indices slide on gloomy GDP data and tech earnings

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25th April 2024 – (New York) The Dow Jones Industrial Average and other key U.S. stock indices faced sharp declines on Thursday, as disappointing first-quarter GDP figures and mixed corporate earnings reports weighed heavily on investor sentiment. The Dow Jones fell by 1.7%, shedding around 650 points, while the S&P 500 dropped 1.4% and the Nasdaq composite was off by 1.9% shortly after the market opened.

The economic backdrop was set early in the day when the 10-year Treasury yield increased slightly to 4.73%. Concurrently, oil prices saw a modest rise of 0.3%, with West Texas Intermediate crude trading at approximately $83 per barrel.

Investor reaction was swift following the release of the latest GDP data by the Bureau of Economic Analysis, which indicated that the economy grew at a mere 1.6% rate, a significant slowdown from the 3.4% growth recorded in the previous quarter and below the anticipated 2.3%.

Adding to the economic picture, the BEA reported that the core Personal Consumption Expenditures (PCE) price index, a key inflation measure watched by the Federal Reserve, climbed at a 3.7% annual rate in the first quarter, surpassing the forecasted 3.4%. The broader PCE price index, which includes volatile food and energy prices, also rose by 3.4%.

Meanwhile, the Labor Department provided a silver lining with its report that jobless claims had unexpectedly dropped to 207,000, defying economists’ predictions of an increase.

The earnings season continued to unfold with its share of surprises, particularly from Meta Platforms (META), which saw its stock plummet by as much as 16% after providing a weaker-than-expected sales outlook for the upcoming quarter despite surpassing sales and earnings expectations for the first quarter.

Other notable earnings reports came from a diverse group of companies including Caterpillar (CAT), Chipotle Mexican Grill (CMG), Ford Motor (F), IBM (IBM), Lam Research (LRCX), and ServiceNow (NOW). Caterpillar’s shares dropped nearly 8% following its earnings announcement, while Chipotle enjoyed a 3.8% rise in its stock price. Conversely, IBM experienced a near 9% fall, and ServiceNow saw its shares decrease by 6.9%.