Stocks slumped on Thursday after a considerably lower-than-expected figure on US GDP for the first quarter raised concerns about the state of the US economy.
The Nasdaq Composite (^IXIC) dropped almost 0.6%. The S&P 500 (^GSPC) dropped 0.5%, while the Dow Jones Industrial Average (^DJI) fell 1%, or over 400 points. The indices recovered from greater losses early in the day.
According to a government estimate, the first-quarter growth fell far short of projections of 2.5%. Meanwhile, an underlying measure of inflation increased by 3.7% in the first quarter, exceeding expectations and greatly outpacing the preceding quarter’s 2% gain. The data come amid continuous disagreement over the direction of the Federal Reserve’s interest rate campaign.
Treasury rates increased following the print, with the benchmark 10-year yield (TNX) reaching its highest levels of the year, lingering at approximately 4.7%.
Meanwhile, Meta (META) shares fell more than 10% as investors worried about escalating expenses at the Facebook and Instagram owner, which expects to invest up to $10 billion on AI technology. Results from other Big Tech firms after the bell on Thursday attempted to allay fears that Meta’s disappointment would be a pattern throughout the sector.
Alphabet (GOOG, GOOGL) shares rose more than 10% in extended trading after the company’s earnings exceeded Wall Street estimates. The search giant also declared its first quarterly cash dividend and increased its stock repurchase programme by $70 billion. Meanwhile, Microsoft (MSFT) shares jumped as much as 5% after the firm exceeded Wall Street’s sales and profits per share expectations.
Intel (INTC) shares fell more than 8% after the market closed, after the firm issued disappointing second-quarter revenue projections. For the current quarter, the business forecasts sales to be between $12.5 billion and $13.5 billion. Wall Street estimated revenue at $13.63 billion.
Meanwhile, shares of social media startup Snap (SNAP) rose. After-hours trading saw the stock climb more than 20% as the company’s quarterly earnings stunned Wall Street across the board. Snap’s profits per share of $0.03 exceeded analysts’ expectations of a $0.05 drop.
Microsoft announced profits per share (EPS) of $2.94 based on revenue of $61.9 billion. Wall Street expected EPS of $2.83 on $60.88 billion in revenue, according to Bloomberg analyst estimates.
Microsoft’s commercial cloud sales was $35.1 billion, above Wall Street expectations of $33.93 billion. On a segment basis, Microsoft’s Productivity and Business Processes sales was $19.57 billion, above forecasts of $19.54 billion. Revenue for Intelligent Cloud and More Personal Computing were $26.71 billion and $15.58 billion, respectively. That exceeded experts’ expectations of $26.25 billion and $15.07 billion, respectively.