On Thursday, the stock market witnessed a downturn due to a US GDP report for the first quarter that was significantly lower than expected, leading to uncertainties about the strength of the US economy in light of constantly elevated interest rates. At the same time, Meta’s (META) revenue outlook unsettled tech investors anticipating the next critical megacap earnings.
The Nasdaq Composite (^IXIC) saw a decrease of approximately 0.6%. The S&P 500 (^GSPC) experienced a smaller drop of less than 0.5%, whereas the Dow Jones Industrial Average (^DJI) declined by around 1%, which is almost 400 points. Despite this, the indexes did manage to bounce back from larger losses seen earlier during the day.
The US GDP growth rate registered a 1.6% annualized growth in the first quarter, falling considerably below the anticipated 2.5%. This figure emerged amid ongoing deliberations on the Federal Reserve’s interest rate strategy. On the flip side, a fundamental gauge of inflation surged by 3.7% in the first quarter, surpassing predictions and showing a significant increase compared to the 2% rise in the previous quarter.
Following the release of the report, Treasury bond yields surged, with the key 10-year yield (^TNX) rising to its peak levels for the year before stabilizing around 4.7%.
Concurrently, Meta’s shares dropped by over 10% as market sentiments soured due to escalating costs at the parent company of Facebook and Instagram, which is planning investments of up to $10 billion in AI infrastructure. Concerns arose about the duration required for these expenditures to translate into revenue, leading to a broader decline in tech stocks. On that note, Microsoft (MSFT), Alphabet (GOOGL, GOOG), and Amazon (AMZN) all saw declines for the day.
Caterpillar (CAT) shares also dipped by about 6% after the manufacturer of heavy equipment voiced ongoing challenges in Europe and a weakening economic scenario in the Asia-Pacific region, excluding China.
In terms of macroeconomics, attention will shift to the March figures of the Personal Consumption Expenditures index, the Federal Reserve’s pivotal measure of inflation, scheduled for publication on Friday.
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Thu, April 25, 2024 at 1:26 PM PDT
Microsoft surpasses Wall Street’s projections, post-market shares gain
In after-hours trading, Microsoft (MSFT) shares elevated by around 5% following the company’s outperformance of revenue and earnings estimates for the previous quarter according to Wall Street’s expectations.
Reporting for Yahoo Finance, Dan Howley stated:
Microsoft disclosed earnings per share (EPS) of $2.94 on revenue of $61.9 billion, surpassing Wall Street’s projections…
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