Stocks Drop, Tech Tumbles With Meta's Weak Outlook, Q1 Stagflation Fears; Gold Miners Advance: What's Driving Markets Thursday?

Wall Street suffers a double blow in Thursday’s session, as softer-than-expected revenue forecasts from Meta Platforms Inc. META are being compounded by weaker-than-expected economic growth and higher inflationary pressures last quarter, raising fears of a stagflation phase for the U.S. economy.

The U.S. economy grew by a 1.6% annualized pace in Q1 2024, slowing down sharply from the 3.4% pace in the previous quarter and missing expectations of a growth rate of 2.5%. Inflation, as measured by the Personal Consumption Expenditure (PCE) price index, substantially accelerated from a 1.8% to 3.4% annualized pace, with the underlying measure of core PCE escalating to 3.7%.

The elite group of Magnificent Seven stocks wiped out nearly $300 billion in market value earlier this morning, prior to marginally curbing losses by 1 p.m. in New York.

The S&P 500 and the tech-heavy Nasdaq 100 dropped by 1% and 1.2% respectively, while blue chips in the Dow Jones Industrial Average slightly underperformed, declining by 1.4%.

Meta Platforms experienced a double-digit decline, pulling down both the tech index and the communication services sector, which saw its worst day since late October 2023.

Only a few industries managed to notch gains, with gold miners in the spotlight following stronger-than-expected quarterly results by Newmont Corp. NEM. The VanEck Gold Miners ETF GDX rose 2.7%.

Gold also saw an increase, rising by 0.7%, outperforming both stocks and bonds amid growing signals of stagflation from the economy. Crude oil inched lower, with the West Texas Intermediate (WTI) light crude down 0.4% to $82 a barrel.

Bitcoin BTC/USD held steady around $64,500.

In the bond market, Treasury yields surged, with the policy-sensitive 2-year yields rising to 5% as traders further dialed back expectations of Fed rate cuts.

Thursday’s Performance In Major US Indices, ETFs

Thursday’s Stock Movers

• Meta Platforms tanked 11% – its worst performance since October 2022 – despite beating both earnings and revenue forecasts last quarter, as weaker-than-expected guidance disappointed traders.
• Other companies reacting to earnings were International Business Machines Corp. IBM down 9%, Service Now Inc. NOW down 5%, Lam Research Corp. LRCX up 2.9%, Chipotle Mexican Grill Inc. CMG up 5.4%, Ford Motor Co. F down 1.6%, United Rentals Inc. URI up 5.5%, with all of them reporting Wednesday after the close.
• Reporting Thursday in the pre-market, Merck & Company Inc. MRK up 2.5%, Caterpillar Inc. CAT down 6.6%, Comcast Corp. CMCSA down 6%, Union Pacific Corp. UNP up 4.3%, S&P Global Inc. SPGI flat, Honeywell International Inc. HON, down 1.4%, Southern Copper Corp. SCCO up 1.7%, Altria Group Inc. MO up 1%, Valero Energy Corp. VLO down 0.5%, Carrier Global Corp. CARR up 8% and Astrazeneca plc AZN up 5.7%.
• Notable names reporting after the close include Alphabet Inc. GOOGL , Boyd Gaming Corporation BYD, Capital One Financial Corporation COF, Gilead Sciences, Inc. GILD, Intel Corp. INTC, Juniper Networks, Inc. JNPR, KLA Corp. KLAC, Microsoft Corp. MSFT, Roku, Inc. ROKU, Teladoc Health, Inc. TDOC, T-Mobile US, Inc. TMUS and Western Digital Corporation WDC.

Read now: Fed’s Inflation Report Looms This Friday: What Makes It So Crucial For Markets?

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