Weaker GDP and an update on inflation sent Wall Street lower
The latest snapshot of the U.S. economy rattled Wall Street traders, leading to a decline in major U.S. stock indexes following disappointing corporate earnings and elevated bond yields.
This was compounded by data revealing that the U.S. economy expanded at its slowest pace in nearly two years during the first quarter.
Investors sold off assets after the latest gross domestic product reading showed a measure of core inflation gained 3.7% in the first quarter, compared to 2% previously.
This suggests that inflation is on the rise, potentially further delaying any planned interest rate cuts from the U.S. Federal Reserve.
According to the Commerce Department's report, U.S. gross domestic product (GDP) grew at a seasonally adjusted and inflation-adjusted rate of 1.6% in the first quarter, falling below the previous 2.2% growth.
This marked a decline from the revised 3.4% rate in the fourth quarter and missed the expected forecast of 2.4%.
In other news, initial claims for state unemployment benefits unexpectedly fell last week by 5,000 to a seasonally adjusted 207,000 for the week ended April 20, as reported by the Labor Department on Thursday. This suggests ongoing tight labour market conditions.
While Fed policymakers are currently in a media blackout ahead of their May 1 policy meeting, the March Personal Consumption Expenditures (PCE) index, the Fed's preferred inflation gauge, is scheduled for release on Friday.
Meanwhile, preliminary data indicates that at the New York Stock Exchange (NYSE) close, the Dow Jones Industrial Average declined by -375.12 points, or -0.98%, to 38,085.80.
The broad-based Standard & Poor's 500 Index lost -23.21 points, or -0.46%, closing at 5,048.42, while the tech-heavy Nasdaq Composite Index decreased by -100.99 points, or -0.64%, to 15,611.76.
Led by Meta's decline, equities in the communications sector were the biggest losers in the S&P 500.
Other industries that experienced losses include healthcare, real estate, financials, consumer staples, and consumer discretionary.
Meta's disappointing results sent its shares plunging -10.56%, marking a near three-month low. The parent company projected weaker-than-expected revenue for the second quarter, attributed to increased spending on artificial intelligence.
Among the 'Mag 7', Alphabet slid -1.96%, Amazon lost -1.65%, Meta dropped -10.56%, Tesla rose +5%, Microsoft fell -2.45%, Apple increased by +0.34%, and Nvidia gained +3.7%.
In after-hours trading, Alphabet surged +11.43%, while Amazon and Microsoft rose +3.57% and +4.43%, respectively.
Conversely, Intel's projection of second-quarter revenue and profit below market estimates caused its shares to plummet by -8% during extended-hours trading.
Southwest Airlines dropped nearly -7% as it slashed its projections for new Boeing aircraft deliveries in 2024 for the third time.
In the U.S. government bond markets, the yield on the 10-year Treasury, which influences rates for mortgages and other economy-dictating loans, reached its highest level this year, nearing the November 2023 closing level of 4.79%.
Additionally, the policy-sensitive two-year yield, reflecting market expectations of future Fed moves, closed at 5.00%.
The crypto universe ended mixed since the weekend of Bitcoin's fourth halving, lacking significant initial interest despite the anticipation leading up to the event.
At the New York close, Bitcoin, the largest cryptocurrency, was trading at around US$64,490.00, fluctuating within an intraday range of US$62,889.00 to US$65,247.00.
Despite Bitcoin's recent decline from its peak at US$72,000.00, support is estimated between US$56,000.00 and US$58,000.00, while resistance is seen between US$78,000.00 and US$81,000.00.
Given the high volatility, closely monitoring price action and adapting trading strategies to market fluctuations is essential.
Meanwhile, Ethereum, the second-largest blockchain in terms of cryptocurrency market capitalization, traded within a daily range of US$3,124.00 to US$3,158.00 before closing at US$3,160.00.
Precious metal prices continue to exhibit volatility, with the spot gold market closing at $2,332 per ounce, while silver closed at $27.40.
In the energy markets, Brent crude's global benchmark rose to $89.44, while the U.S. benchmark, West Texas Intermediate, settled at $83.54.
The U.S. Dollar Index (U.S. DXY), which gauges the dollar's performance against six major foreign currencies in the forex market, was flat at 105.60.
Meanwhile, the Eurodollar was 1.0728, and the British pound finished at 1.2506. The Japanese yen ended at 154.56, while the Australian dollar was at 0.6530.
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