Stocks slumped on Thursday as most megacaps fell after Meta Platforms’ quarterly results, while sentiment was shaken amid signs of persistent inflation that dampened hopes of the Federal Reserve easing monetary policy anytime soon.
The Dow Jones Industrial Average slid 580 points, or 1.5%, to 37,879. It had tumbled nearly 700 points in morning trading.
The S&P 500 dropped 1.1%, and the Nasdaq fell 1.5%.
Meta plunged 14.7% after the Facebook-parent forecast higher expenses and lighter-than-expected revenue.
Other growth stocks also came under pressure, with Alphabet, Amazon and Microsoft down between 2% and 4.5%.
Meanwhile, US economic growth slowed more than expected in the first quarter, but an acceleration in inflation suggested that the Fed would not cut interest rates before September.
“The combination of some bad earnings and bad economic reports when it comes to inflation kind of set us off on this trend right now,” said Joe Saluzzi, co-founder of Themis Trading.
“It’s too soon to be tossing around words (like) stagflation, where the economy is wallowing and inflation is still rising. Those data points certainly would support that, but it’s kind of early to say we’re in that mode.”
Alphabet, Microsoft and Intel are scheduled to report their quarterly numbers on Thursday after markets close.
Yield on the 10-year Treasury note rose to multi-month highs after the data, last standing at 4.7019%.
Separately, the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, pointing to still tight labor market conditions.
The data comes in ahead of the Personal Consumption expenditures (PCE) index, the Fed’s preferred inflation gauge, on Friday.
Money markets are pricing in just about 36 basis points of rate cuts from the Fed this year, down from about 150 bps seen at the start of the year, according to LSEG data.
Downbeat results from other companies also weighed on equities.
International Business Machines dropped 9% after the firm said it will buy HashiCorp in a deal valued at $6.4 billion, and as its first-quarter revenue missed estimates.
Southwest Airlines slid 8% after slashing its estimates for new aircraft deliveries from Boeing in 2024 for the third time, saying it plans to undertake cost-cutting measures to ease the resultant blow.
Caterpillar lost 7.8% after the company said it expects sales to fall in the second quarter as demand for its construction equipment eases from last year’s boom.
On the bright side, Newmont gained 10.2% after the world’s largest gold miner beat Wall Street estimates for first-quarter profit.