May 30th, 2024

Stock market today: Wall Street stumbles after report shows US growth slowed in the first quarter

By Yuri Kageyama And Matt Ott, The Associated Press on April 25, 2024.

FILE - People pause near an entrance to the New York Stock Exchange in New York, March 19, 2024. (AP Photo/Eduardo Munoz Alvarez, File)

NEW YORK (AP) – Stocks are tumbling after a report suggesting flagging economic growth and still-high inflation hurt hopes that have kept Wall Street high recently. A sharp drop for Facebook parent Meta Platforms also dragged the market lower. The S&P 500 fell 1.3% early Thursday. The Dow Jones Industrial Average lost 503 points, and the Nasdaq composite fell 2.1%. Treasury yields jumped in the bond market after the government reported that inflation remained hotter than forecast in the first three months of the year. It also reported that the U.S. economy’s growth slowed during the period to a 1.6% annual rate, well below forecasts.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

Markets on Wall Street gave back some of this week’s gains early Thursday ahead of another heavy slate of corporate earnings and the government’s initial estimate of how the U.S. economy fared in the first quarter of 2024.

Futures for the Dow Jones industrials and the S&P 500 each declined 0.6% before the bell.

Southwest Airlines fell nearly 8% after the carrier said it lost $231 million in the first quarter and will limit hiring, offer voluntary leave to employees and stop flying to four airports. CEO Robert Jordan said the airline was reacting quickly “to address our financial underperformance” and cope with delayed deliveries of new planes from Boeing.

American Airlines reported a $312 million loss in its most recent quarter as labor costs rose, but said it expects to return to profitability in the second quarter. That sent its stock up 5.2% before markets opened Thursday.

Facebook and Instagram parent company Meta fell 15.6% in after hours trading when it issued lukewarm revenue guidance after the bell Wednesday along with otherwise strong first-quarter financial results.

Two others of the “Magnificant Seven” stocks – Google parent Alphabet and Microsoft – report their most recent quarterly results after the bell Thursday. Those companies drove most of the U.S. stock market’s gain last year, and they’ll need to perform to justify their high prices.

The hope is that profit growth will broaden beyond the Magnificent Seven to other types of companies, in large part because of a remarkably solid U.S. economy. They’ll likely need to deliver fatter profits if they want their stock prices to rise. That’s because they’re unlikely to get much help from the other lever that can lift stock prices: interest rates.

After a flurry of rate hikes beginning more than two years ago, the Federal Reserve has left interest rates alone at its last five meetings. Expectations that the U.S. central bank would start slashing rates have been undercut by a strong economy and job market.

Fed officials will get more data on the U.S. economy Thursday when the government releases its initial estimate of the country’s gross domestic product in the first quarter of 2024. Analysts expect that GDP – the economy’s total output of goods and services – grew at a slow but still-decent 2.2% annual pace from January through March.

France’s CAC 40 lost 0.9% in midday trading, while Germany’s DAX dipped 0.6%. Britain’s FTSE 100 rose 0.7%.

Japan’s benchmark Nikkei 225 slid 2.2% to 37,628.48. South Korea’s Kospi dropped 1.8% to 2,628.62. But Hong Kong’s Hang Seng gained 0.5% to 17,284.54, while the Shanghai Composite rose 0.3% to 3,052.90.

Markets were closed in Australia for a national holiday, Anzac Day.

Attention is also turning to the Bank of Japan, whose two-day monetary policy meeting started Thursday.

“For the record, heading into tomorrow’s policy decision, exceptional Japanese yen weakness is the agitated elephant in the room for the BOJ,” Tan Jing Yi of Mizuho Bank said in a commentary.

In currency trading, the U.S. dollar rose to 155.55 Japanese yen from 155.31 yen. The euro cost $1.0722, up from $1.0697.

The yen has been trading at 155 yen-levels lately, its lowest level in 34 years. That helps Japanese exporters by raising the value of their overseas earnings, but it also raises the price of imports.

Speculation has been growing Japan may intervene to prop up the yen. But opinion is divided if and when that might happen.

Chris Turner, global head of research at ING Economics, said the dollar’s trading above 155 yen was at a level many had expected to trigger an intervention in the market, but conditions weren’t sufficient.

“The sufficiency has to come from market conditions and one can argue we are not there yet,” Turner said, pointing to recent trading volatility.

In energy trading early Thursday, benchmark U.S. crude added 19 cents to $83 a barrel. Brent crude, the international standard, rose 17 cents to $87.21 a barrel.

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