Stock Market Today: Dow, S&P 500 Down After GDP Data; Meta, DJT, Nvidia, Caterpillar, Southwest Airlines, Royal Caribbean, and More Movers (2024)

What to Watch Today

Google owner Alphabet is due to report earnings after the close, along with Microsoft. Intel will also post results later in the day.

For live updates and analysis of the earnings, click here.

U.S. economic growth for the first quarter fell short of forecasts.

Inflation-adjusted gross domestic product grew at an annualized rate of 1.6% in the first quarter, according to an initial estimate the Bureau of Economic Analysis released Thursday. That was below the 2.2% growth that economists surveyed by FactSet had expected.

To follow the latest developments from the GDP report, click here.

The major U.S. indexes fell on Thursday, as investors found risks to the inflation outlook in the latest economic data.

The Dow Jones Industrial Average fell 375 points, or 1%. The S&P 500 was off 0.5%, while the tech-heavy Nasdaq Composite declined 0.6%. Both the S&P 500 and the Nasdaq broke their three-day winning streaks.

The yield on the 10-year Treasury rose to 4.706%, marking the highest level this year; it is now dangerously close to Nov. 1, 2023 closing level of 4.79%. When yields rise, investors lose as the value of bonds in their portfolio falls.

Investors sold off assets after the latest gross domestic product reading showed a measure of core inflation gained 3.7% in the first quarter versus 2% prior—which suggests that inflation is on the rise and may further delay any planned interest rate cuts from the Federal Reserve.

Fed-fund futures now show a 59.2% chance that the central bank will trim interest rates in September, according to the CME FedWatch Tool. Estimates for a July rate cut are 32%. Estimates were pared back across the board.

This release “adds to hawkish risks in next week’s [Federal Open Market Committee] communications and is indicative of the growing potential of there being no rate cut in 2024,” wrote David Doyle, head of economics at Macquarie in an email on Thursday.

The Nasdaq was particularly weighed down by Meta Platforms’ commentary on artificial intelligence. CEO Mark Zuckerberg expects to spend more aggressively on the technology, and forecast second quarter revenue that is slightly shy of analysts' consensus at the midpoint.

The tech sector will remain in focus after the market close, when Microsoft and Google owner Alphabet will release their quarterly earnings results.

U.S. tech stocks rebounded Thursday afternoon from early morning lows.

The iShares U.S. Technology exchange-traded fund, which offers exposure to U.S. electronics, computer software, and hardware companies, was down 0.3% at 2:21 p.m. Eastern. It was down more than 2.1% when the market opened.

The recovery comes ahead of quarterly earnings from tech stalwarts like Microsoft Corporation and Google parent Alphabet, which are expected to be released after the market closes.

Investors on Thursday flocked to buy the latest government debt expiring in seven years, another sign there’s demand for risk-free shorter duration debt.

The Treasury Department issues debt backed by the U.S. which is guaranteed to finance government operations. On Thursday at 1 p.m. Eastern, the department offered $44 billion worth of 7-year notes, which were awarded a yield 4.716%. The yield was 0.1 basis points lower than it was as of the pre-bidding deadline.

Direct bidders, such as hedge funds, mutual funds, and other institutions, claimed 21% of the supply, versus the 17.1% norm. Recent auctions for 2-year and 5-year notes have seen strong demand based on certain metrics, despite the Treasury department offering record amounts of debt.

Recent auctions for 10-year and 30–year bonds, however, saw weak demand–signaling that investors are reluctant to buy debt maturing so far in the future, but can digest shorter-term maturities.

The likely explanation: Bets on Federal Reserve officials cutting rates have pared down, meaning more traders see rates remaining higher for longer. That means there’s less incentive to buy longer-dated debt when you can get juicy yields on short-term paper.

To be sure, none of this has had a big impact on yields–and bond traders are more focused on the macroeconomic situation anyway.

“Bottom line, all of these auctions come in record sizes and while I do think it’s important to see how the supply is absorbed on the day of sale, the market impact is never really more than one day,” wrote Peter Boockvar, an economist and the chief investment officer of Bleakley Financial Group, wrote in a Thursday email.