Investing.com– The S&P 500 closed lower, but well off session lows Thursday as Meta cut come losses, though rising Treasury yields on economic data showing slowing growth, but sticky inflation, forced traders to push out bets on a first rate cut to December.
At 16:00 ET (20:00 GMT), the Dow Jones Industrial Average fell 375 points, or 1%, the S&P 500 fell 0.4%, and the NASDAQ Composite slid 0.6%.
Treasury yields climb on dwindling rate-cut bets amid sticky inflation
Treasury yields climbed after data showed the U.S. economy grew by just 1.6% in the first quarter, on an annualised basis, much slower than expected, while a core underlying measure of inflation surprised to upside in Q1, rising 3.7%, pushing out rate-cut bets.
Swaps traders are no longer fully pricing in a first Fed rate cut before December.
The weaker growth but strong inflation raised fears of stagflation, but some economists noted that growth wasn’t as weak as the report suggested.
The make up of the data wasn’t as soft, as inventories and foreign trade had a 1.1% drag on GDP in Q1, and “domestic demand growth proceeded at a strong pace of +2.8% annualized,” Goldman Sachs said in note.
The data come ahead of Friday’s PCE price index data, which is widely seen as the Federal Reserve’s favorite gauge of inflation.
Meta, IBM slump weigh on tech peers
Meta Platforms Inc (NASDAQ:META) stock slid 10.6% to a near three-month low, after the Facebook parent forecast weaker-than-expected revenue for the second quarter due to higher spending on artificial intelligence. The stock had fallen as much as 16% intraday.
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The guidance largely offset stronger-than-expected first-quarter earnings, and set a dour tone for upcoming earnings from the company’s major technology peers – specifically Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) due after the closing bell Thursday.
But UBS suggested the slump in Meta would be limited, flagging the company’s “potential for better-than-expected ad revenue growth given increased ramp in Reels ad load as well as eCPM growth”
IBM (NYSE:IBM) fell 8% on weak first-quarter earnings, while the firm also announced a $6.4 billion deal to buy Hashicorp (NASDAQ:HCP).
IBM’s deal for Hashicorp “makes sense strategically to improve IBM’s Software portfolio and fits with Red Hat/infra focus,” BMO Research said in a Thursday note.
Caterpillar in earnings stumble, Ford slips despite Q1 beats, Rubrik soars on market debut
Caterpillar (NYSE:CAT) stock fell 7% after the heavy machinery manufacturer reported a mixed first quarter of 2024, with earnings surpassing analysts’ expectations but revenue falling short.
Ford (NYSE:F) fell nearly 1% despite reporting stronger first-quarter earnings and positive guidance on free cash flow, weakness in its EV business was offset by stronger performance in its commercial business.
Chipotle Mexican Grill (NYSE:CMG) added 6.5% after it beat expectations with its first-quarter earnings, driven by hike in the price of its menu items.
Rubrik Inc (NYSE:RBRK) jumped 15% on its market debut, opening up at $38.60, after pricing IPO at $32 a share.
(Peter Nurse, Ambar Warrick contributed to this article.)
