Wall Street stocks closed lower on Thursday as markets were stunned by data showing slower-than-expected U.S. economic growth and persistent inflation, coupled with a sell-off in large cap stocks triggered by disappointing results from Meta Platforms.
Market Snapshot
The Dow Jones Industrial Average fell 375.12 points, or 0.98%, to 38,085.80, the S&P 500 fell 23.21 points, or 0.46%, to 5,048.42 and the Nasdaq Composite fell 100.99 points, or 0.64%, to 15,611.76.
Market Movers
Alphabet – Shares soared about 12% in extended trading after first-quarter earnings of $1.89 per share beat analysts’ estimates of $1.51 per share, according to LSEG, and revenues of $80.54 billion exceeded expectations of $78.59 billion. The search giant operator also authorized its first ever dividend, as well as a $70 billion buyback.
Microsoft – The tech giant saw shares climb 4.5% in extended trading after the software maker posted fiscal third-quarter results that surpassed Wall Street’s expectations.
Snap – Shares soared more than 27% in afterhours trading after the social media firm reported first-quarter results that beat analysts’ estimates. Revenue increased 21% to $1.19 billion, primarily driven by improvements in the company’s advertising platform.
Intel – The tech stock slid 8% in extended trading after the company missed expectations for first-quarter sales and gave a weak forecast for the current quarter. Intel reported earnings that beat Wall Street expectations, however.
Rubrik - Rubrik's shares climbed over 15% in their debut on the New York Stock Exchange on Thursday, giving the Microsoft-backed cybersecurity firm a valuation of $6.77 billion.
The startup joins a list of companies that have seen strong debuts recently as initial public offerings (IPOs) bounce back on hopes of a soft landing for the economy, where inflation falls without a recession or big job losses.
Dexcom – The manufacturer of glucose monitoring systems fell 8%, even as the company posted beats on the top and bottom lines. Dexcom reported adjusted earnings of 32 cents per share on revenue of $921 million in revenue. Analysts polled by FactSet anticipated 27 cents per share in earnings and $909.9 million of revenue.
Gilead Sciences – The biotech stock jumped almost 3% after a better-than-feared quarterly report. Gilead posted a loss of $1.32 per share, narrower than a loss of $1.49 per share expected by analysts polled by LSEG. Revenue of $6.69 billion also came in above expectations.
Skechers – The shoe company advanced more than 7%. Skechers reported first-quarter earnings of $1.33 per share and revenue of $2.25 billion. Those results surpassed the earnings of $1.10 per share and $2.2 billion in revenue anticipated by analysts polled by LSEG.
L3Harris Technologies – Shares rose nearly 2% after the aerospace and defense company handed in a stronger-than-expected report. L3Harris posted an adjusted EPS of $3.06 and surpassed consensus estimates of $2.90 per share, per LSEG. Revenue of $5.21 billion also came in higher than an estimate of $5.11 billion.
Meta Platforms reported first-quarter earnings and revenue that topped expectations but guidance that missed forecasts, sending shares of the parent of Facebook and Instagram down 11%. Meta projects second-quarter revenue of $36.5 billion to $39 billion; the midpoint of the range was just shy of analysts’ consensus of $38.2 billion. Meta projected 2024 capital expenditures of $35 billion to $40 billion, above its previous range of $30 billion to $37 billion, on higher artificial-intelligence-related spending.
International Business Machines is buying the cloud-software company HashiCorp for $35 a share in cash, or about $6.4 billion. It also reported first-quarter revenue of $14.47 billion, up 1% or 3% adjusted for currency; Wall Street estimate was $14.53 billion. Adjusted earnings were $1.68 a share, higher than the $1.60 consensus. Free cash flow was $1.9 billion, up $600 million from the year earlier. Shares were down 8.3%. HashiCorp jumped 5% to $32.98.
Bristol Myers Squibb was falling 8.5% after the drugmaker posted a narrower quarterly loss and better-than-expected revenue, but cut its profit forecast for the full year.
Southwest Airlines declined 9% after the carrier reported a wider-than-expected loss and said it expects to receive 20 Boeing 737 MAX planes this year, down from a previous forecast of 46 and its initial estimate of 85.
Caterpillar was down 6.6% after first-quarter revenue missed estimates on lower sales volumes. Revenue of $15.8 billion was below Wall Street expectations of $16 billion. Lower sales volumes, Caterpillar said, were mostly offset through “favorable price realization.” Operating profit margins improved to 22.2% in the first quarter from 21.1% a year earlier.
Textron declined 10% after reporting disappointing first-quarter earnings and saying it would be cutting jobs under a restructuring plan.
Hertz Global dropped 20% after the rental car company reported a wider-than-expected first-quarter loss and said it sold more electric vehicles from its fleet than originally planned in the period.
Shares of Merck were up 3% after the drugmaker reported first-quarter earnings that beat analysts’ expectations and raised its full-year sales and profit outlook. Sales of cancer drug Keytruda rose 20% to $6.9 billion.
Impinj surged 27% after the internet-of-things chip company posted first-quarter adjusted earnings and revenue that beat Wall Street estimates and said it expects second-quarter revenue of $96 million to $99 million, higher than estimates of $79 million.
Market News
US Economy Slows and Inflation Jumps, Damping Soft-Landing Hopes
US economic growth slid to an almost two-year low last quarter while inflation jumped to uncomfortable levels, interrupting a run of strong demand and muted price pressures that had fueled optimism for a soft landing.
Gross domestic product increased at a 1.6% annualized rate, below all economists’ forecasts, the government’s initial estimate showed. A wider trade deficit subtracted the most from growth since 2022. The economy’s main growth engine — personal spending — rose at a slower-than-forecast 2.5% pace.
A closely watched measure of underlying inflation advanced at a greater-than-expected 3.7% clip, the first quarterly acceleration in a year, the Bureau of Economic Analysis report showed Thursday.
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