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Dow Jones loses more than 500 points after disturbing US data
US stock indices fell during these moments of trading on Thursday, after the latest US economic data showed a sharp slowdown in growth and indicated continued inflation.
The Dow Jones Industrial Average fell 553 points, or 1.4%, under the weight of sharp declines in shares of Caterpillar Inc (NYSE:CAT) and IBM (NYSE:IBM). The Standard & Poor's 500 Index fell 1.1%, while the Nasdaq Composite Index fell 1.5%.
The Bureau of Economic Analysis said that US gross domestic product grew by 1.6% in the first quarter. Economists had expected GDP growth to reach 2.4%.
Along with the pessimistic growth rate for the quarter, the report showed consumer prices rising at a rate of 3.4%, much higher than the previous quarter's advance of 1.8%. This has raised concerns about persistent inflation and raised questions about whether the Fed will be able to cut interest rates anytime soon.
After the GDP reading, traders lowered their expectations for an easing of the Federal Reserve's monetary policy. While Federal Reserve funds futures trading data indicate that there will be only one interest rate cut this year.
A lackluster GDP has added further pressure to an already jittery market competing with concerns about declining growth in technology company profits.
Meta (NASDAQ:META) stock fell 13% after the social media giant issued its second-quarter revenue guidance. This will be the largest decline for the stock in one day since October 2022.
