US Stocks took a sharp plunge on Thursday following a notably weaker-than-anticipated US GDP report for the first quarter, sparking concerns about the resilience of the US economy amidst persistent high interest rates. The tech sector led the downturn, with Meta’s revenue projections unsettling investors eagerly awaiting earnings from other major tech players.
The Nasdaq Composite dropped over 2%, while the S&P 500 and the Dow Jones Industrial Average both saw declines of 1.3% and 1.5%, respectively, representing a loss of over 500 points for the Dow.
First-quarter US GDP growth fell short of expectations, registering a 1.6% annualized pace compared to the projected 2.5%. This underwhelming figure adds fuel to the ongoing discussion regarding the Federal Reserve’s interest rate strategy.
Click here to get the full report
Following the release of the GDP data, Treasury yields surged, with the benchmark 10-year yield reaching its highest levels of the year.
Meanwhile, Meta shares tumbled by as much as 15% as investors expressed apprehension over escalating expenses at the parent company of Facebook and Instagram. Meta’s plans to allocate up to $10 billion toward AI infrastructure investments raised concerns about the timeline for these investments to translate into revenue, dragging down tech stocks across the board. Microsoft, Alphabet, and Amazon all saw declines exceeding 3%.
The Meta setback dampened hopes that strong performances from the “Magnificent Seven” tech giants could reignite a rally in US stocks, which have recently shown signs of losing momentum.
Looking ahead, attention will shift to the March reading of the Personal Consumption Expenditures index, the Federal Reserve’s preferred measure of inflation, scheduled for release on Friday.
