The U.S. stock market took a hit on Thursday as concerns over high inflation and slowing economic growth weighed on investor sentiment. The S&P 500 was down 0.4%, the Dow Jones Industrial Average fell 1%, and the Nasdaq composite dropped 0.6% in late trading.
One of the major factors contributing to the market decline was the sharp drop in Meta Platforms, the parent company of Facebook and Instagram. Despite reporting better-than-expected profits for the latest quarter, investors focused on the company’s plans to increase investments in artificial intelligence, which fell below analysts’ expectations.
The disappointing economic data released on Thursday added to the market pressure, with the report showing a slowdown in the U.S. economy’s growth rate to 1.6% in the first quarter of the year, down from 3.4% at the end of 2023. In addition, inflation was higher than forecasted, raising concerns about the Federal Reserve’s ability to stimulate the economy by cutting interest rates.
While the economic report may not have been as bad as initially thought, with consumer spending remaining relatively solid, the threat of higher inflation and slower growth still looms over the market. Treasury yields rose as traders adjusted their expectations for interest rate cuts by the Fed, with the yield on the 10-year Treasury reaching 4.70%.
Companies like Southwest Airlines, Textron, Caterpillar, and IBM saw their stocks tumble after reporting weaker-than-expected results, while Carrier Global managed to buck the trend with stronger-than-expected earnings.
In global markets, Japan’s Nikkei 225 slid 2.2% as investors awaited news from the Bank of Japan, while indexes in other parts of Asia and Europe were mixed.
Overall, the market remains volatile as investors grapple with the challenges of high inflation, slowing growth, and uncertainty over the Fed’s monetary policy decisions.
