The Dow Jones fell on inflation and growth concerns, and the Meta slides

Stocks fell on Thursday after the latest US economic data showed a sharp slowdown in growth and pointed to persistent inflation.

the Dow Jones Industrial Average Shares fell 340 points, or 0.8%, hit by the sharp declines Larva And IBM. the Standard & Poor's 500 It decreased by 0.4%, and Nasdaq Composite Lost 8%.

The Bureau of Economic Analysis said that US gross domestic product expanded by 1.6% in the first quarter. Economists surveyed by Dow Jones expected GDP growth to reach 2.4%.

In addition to the pessimistic growth rate for this quarter, the report showed consumer prices rising at a rate of 3.4%, much higher than the previous quarter's advance of 1.8%. This has raised concerns about persistent inflation and raised questions about whether the Fed will be able to cut interest rates anytime soon. Together, both sets of data suggest a stagflationary environment and could add another headwind for policymakers moving forward.

“In the short term, the numbers do not appear to be a green light for bulls or bears… Uncertainty is unlikely to ease pressures in a market experiencing its deepest decline since last year,” managing director Chris Larkin said. Trading and investing on E*Trade from Morgan Stanley.

After the GDP reading, traders lowered their expectations for an easing of the Federal Reserve's monetary policy. Fed funds futures trading data suggests there will be only one rate cut this year, according to the CME FedWatch tool.

The lackluster GDP added further pressure to an already jittery market competing with concerns about declining growth in technology profits.

dead It fell 12% after the social media giant issued light revenue guidance for the second quarter. This would be the stock's biggest single-day decline since October 2022. Universal business machines It also fell 8% after missing consensus estimates for first-quarter revenue.

“Despite all the attention given to generative AI in the past nine months, Meta’s failure to meet its revenue growth expectations in the first quarter raises questions about whether monetizing this technology is as easy as traders have been led to believe by management,” said Thierry Wiesmann. , Macquarie's global FX and interest rates expert.

The Meta report raises concerns ahead of other big tech releases. Microsoft And the alphabet Earnings are scheduled to be announced after the close on Thursday.

Tech investor stands by Meta Platforms, but says stock needs to 'find support'

Technology investor Paul Meeks stands ready Meta platforms Despite Thursday's sell-off, he said it's too early to grab shares yet.

The stock needs to “find support for at least a few trading sessions, so I'm more confident that short-term selling has been exhausted,” said Harvest Portfolio Management's co-chief investment officer and portfolio manager.

Meeks considers himself a long-term owner of the stock, but said he's waiting for more earnings reports to arrive. This includes results from his favorite AI names Nvidia And Advanced micro devices.

-Samantha Sobin

1:15 PM: Meta's spending on AI could benefit these stocks

Meta platforms It fell nearly 12% in midday training as investors react to news that it will take time to see the full benefits of the company's increased investments in artificial intelligence. But one company's loss may be another company's gain. Where Meta spending could turn into greater revenue is at Super Micro, Arista Networks, Pure Storage, Broadcom and AMD, according to Wells Fargo.

Analyst Aaron Ruckers estimates that Meta was about a 10% customer of Super Micro in the fourth quarter of 2023, and of Pure Storage last year.

Arista Networks, which makes AI cables and other Ethernet-based products, received about 21% of last year's revenue from Meta, he said.

Rackers also said Meta uses custom networking chips from Broadcom and was an early customer for the new MI300X AI chip.

Chip stocks traded higher on Thursday, versus a sharp decline in the broader market.

—Christina Bartsenevelos, Christina Scheider-Burke

12:41 p.m.: Check out which stocks are making headlines in midday trading:

Victoria's Secret — Shares fell 3.5% after Goldman Sachs initiated coverage on the stock with a sell rating, saying it sees “difficult macro pressure and continued competitive pressure” for the lingerie company in the near term. In the long term, the company is taking a constructive stance regarding the company's loyalty initiatives and its renewed focus on merchandise.Meta platforms Shares of Facebook's parent company fell by more than 11%. Meta reported lower-than-expected revenue guidance for the second quarter on Wednesday, and CEO Mark Zuckerberg talked about spending in areas like artificial intelligence and mixed reality that are not currently profitable. Technology Stocks – Shares of major technology giants fell on Thursday as weak meta and revenue expectations led to declines across the sector. Microsoft And the alphabet Shares fell about 3% and 2%, respectively, ahead of their earnings due after the bell. Amazon The stock price fell by 2%.Monster drink – JPMorgan downgraded Monster Beverage to Neutral from Overweight due to “cost pressure,” sending shares down nearly 3%.

For the full list, read here.

– Piya Singh

12:40 PM: Developed markets are showing signs of pressure from rising geopolitical tensions, lower expectations for interest rate cuts and the recent equity sell-off.

All major developed market equity fund groups tracked by EPFR, with the exception of Canadian equity funds, saw net redemptions during the week ending April 17, according to EPFR.

During this period, US equity funds saw their third outflow in five weeks.

— Hakyung Kim

12pm: Thursday's sell-off pushes the Dow into negative territory for the week

Thursday's decline took the Dow below its flat line for the week, underscoring the size of the daily loss.

The average blue-chip stock fell more than 1.5% in late morning trading. It has now fallen about 0.4% during the week, although it is heading towards gains of more than 1% before the start of the session.

With this decline, the Dow Jones remained within 0.5% of its 2024 flat line.

While the S&P 500 and Nasdaq Composite also fell in Thursday's session, both remained on track to end the week higher. The S&P 500 was poised to close up 0.8%, while the tech-heavy Nasdaq was headed for a 1% gain.

-Alex Haring

11:24 a.m.: Chip industry ETFs were a rare bright spot for investors on Thursday

Semiconductor ETFs performed well on Thursday even as the broader market struggled.

The VanEck Semiconductor ETF (SMH) rose about 0.7% during the session, while the Invesco PHLX Semiconductor ETF (SOXQ) rose about 0.9%.

The iShares Semiconductor ETF (SOXX) added about 0.5%. Nvidia was helping lead the group higher, rising more than 2%. The chip giant saw a 10% sell-off last week, but is starting to recoup those losses.

-Jesse Pound

10:46 AM: IBM and Caterpillar lead the Dow Jones index lower

The Dow Jones index fell nearly 700 points in early trading Thursday, putting the blue-chip stock average on track for its worst day of the year.

IBM And Larva The 30 stocks led into the red, falling more than 9% and 7%, respectively, on the back of earnings. Both missed analysts' estimates for revenue in the quarter.

Shares of major technology companies Microsoft and Amazon were the next worst performing, as their shares fell by about 4% and 3%, respectively.

More than two out of every three Dow Jones stocks traded during the session. Merck, which reported better-than-expected earnings this morning, and UnitedHealth bucked the downtrend, each rising more than 1% on the session.

-Alex Haring

10:22 AM: Meta shares are on pace for their worst day since October 2022

Meta platforms Shares fell 11.34% on Thursday. The losses put the stock on track for its worst day since October 27, 2022, when the Meta fell 24.56%.

Shares fell after Meta issued weak revenue guidance that overshadowed its better-than-expected first-quarter earnings. The selling intensified after CEO Mark Zuckerberg's comments about the company's long-term investments in artificial intelligence and the metaverse.

— Hakyung Kim

10:04 AM: Decliners on the New York Stock Exchange lead gainers 10-1

About 10 stocks traded lower on the New York Stock Exchange on Thursday for every one higher, as the latest GDP report and new technology earnings dampened investor sentiment. Overall, 2,386 companies listed on the New York Stock Exchange declined, while 210 stocks rose.

-Fred Imbert

9:52 AM: Investor says US GDP report was 'worst of both worlds'.

A disappointing US GDP reading could spell trouble ahead for the stock market if inflation continues to hold steady, one investor said.

“This report was the worst of both worlds: economic growth is slowing and inflationary pressures persist,” wrote Chris Zaccarelli, chief investment officer at the Alliance of Independent Advisors.

He continued: “The Fed wants to see inflation start to fall in a sustained way, but the market wants to see economic growth and corporate profits increase, so if neither of them is heading in the right direction, that will be bad news for the markets.” .

The data also raises the stakes for the personal consumption expenditures report scheduled for release on Friday. Investors are hoping the personal consumption expenditures report, the Fed's preferred measure of inflation, will show improvement in price pressures after the March consumer inflation report came in hotter than expected.

– Sarah Maine

9:33 am: Stocks fell after GDP data showed economic growth slowing

US stocks opened lower on Thursday, with stocks selling off after new GDP data pointed to signs of slowing economic growth.

The Dow Jones Industrial Average fell 500 points, or 1.3%. The S&P 500 fell 1.4%, while the Nasdaq Composite lost 2.3%.

– Brian Evans

8:58 AM: The 10-year Treasury yield jumps to the highest level since November

the 10-year Treasury bond yield The index broke above 4.7% after the GDP report was released, reaching its highest level since November.

While slowing economic growth could be a factor pushing the Fed toward lowering interest rates, rising prices shown in the GDP report could prompt the central bank to keep interest rates steady until inflation subsides.

-Jesse Pound

8:51 AM: GDP slowed in the first quarter

U.S. gross domestic product slowed in the first quarter, weighing on stock futures before the opening bell, the Bureau of Economic Analysis said Thursday.

GDP expanded 1.6% in the first quarter, while economists polled by Dow Jones expected growth of 2.4%.

– Brian Evans