Troubling US economic data hammered stock prices lower on Thursday after Q1 GDP figures came in lower than expected at just 1.6% against a consensus of 2.5%. A worrying statistic in its own right, but further exacerbated by an unexpected increase in Core PCE Prices, which grew 3.7% in the first quarter of the year, also beating estimates. The combined figures paint a rather bleak picture as far as inflation is concerned. At the risk of stating the obvious, higher prices coupled with stagnant growth is not really on anyone’s wish list, and certainly not on the Federal Reserve’s.
Major indices opened low before spending most of the day clawing their way back up to somewhat more respectable levels. The Dow Jones was the hardest hit, keeping its neck above the 38,000 level to clock a rather pitiful 1% loss. The Nasdaq Composite did what it could but ultimately finished the session an uninspiring 0.64% in the red. The S&P 500 briefly dipped below 5,000 points before closing just under half a percent lower.
To add insult to injury, some of the earnings reports published this week have not exactly made for confidence-inducing reading. Meta revealed exorbitant operating costs that raised more questions about the company’s capacity to generate revenue, causing shares to plummet over 10%. Tech stocks in general suffered moderate losses as Microsoft, Alphabet and Amazon faced selling pressure.
Inflation fears pressured the Dollar slightly, pushing the DXY down a quarter of a percent, although currency traders are probably waiting for the Core PCE Price Index to drop on Friday before making more substantial bets. The Fed’s preferred inflation metric will no doubt shed more light on the developing stagflation narrative.
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