US benchmark equity indexes dropped Thursday amid a post-earnings selloff in Meta Platforms (META), while markets also evaluated data showing that Q1 economic growth fell short of Wall Street's expectations.
The Dow Jones Industrial Average fell 1% to 38,085.8, while the Nasdaq Composite declined 0.6% to 15,611.8. The S&P 500 lost 0.5% to 5,048.4. Communication services was the steepest decliner, down 4%, while materials paced the gainers.
In company news, Meta shares tumbled nearly 11% in regular trading, the worst performer on the S&P 500 and the Nasdaq. The Facebook and Instagram parent late Wednesday projected higher capital spending this year than previously expected as its Q1 financial results exceeded estimates.
International Business Machines (IBM) was the top decliner on the Dow and among the worst performers on the S&P 500, down more than 8%. The tech giant's Q1 revenue fell short of market expectations late Wednesday. IBM agreed to acquire multi-cloud infrastructure automation company HashiCorp (HCP) in a deal with an enterprise value of $6.4 billion. HashiCorp closed 4.5% higher.
Southwest Airlines' (LUV) shares declined 7%, among the steepest drops on the S&P 500, as the company lowered its 2024 revenue outlook amid Boeing (BA) delivery delays after reporting weaker-than-expected Q1 results.
Newmont (NEM) was the best performer on the S&P 500, up 13%, following a Q1 beat.
The US two-year yield rose 6.1 basis points to 5%, while the 10-year rate added five basis points to 4.70%.
In economic news, US real gross domestic product grew at an annual rate of 1.6% in the March quarter, while consumer spending growth eased sequentially amid rising inflationary pressures, according to an advance estimate by the Bureau of Economic Analysis. The consensus was for a 2.5% real GDP gain in a survey compiled by Bloomberg. In Q4 2023, the economy grew 3.4%.
"The sharp slowdown in real consumer spending growth in the first quarter should restore some faith that the (Federal Reserve's) restrictive monetary policy is having a dampening impact on consumer demand, since most of the weakness came from interest-rate sensitive spending," BMO said in a note. "The broad price inflation resurgence we saw in this report will give the (Federal Open Market Committee) pause that their work to vanquish the inflation monster is nowhere near complete."
Pending home sales in the US climbed more than projected last month to the highest level in a year, though growth remains constrained by low inventory and high mortgage rates, the National Association of Realtors said.
Manufacturing activity in the US Midwest region slid further into contraction territory in April amid declines in production and shipments, the Federal Reserve Bank of Kansas City said.
West Texas Intermediate crude oil rose 1.2% to $83.78 per barrel Thursday.
Gold and silver increased 0.3% each to $2,345 per troy ounce and $27.44 per ounce, respectively.