Stock Market Today: Stocks tumble as GDP slows with inflation spike; Meta plunges

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U.S. equity futures moved firmly lower Thursday, while the dollar held steady against its global peers, as investors counted the cost of a big slump in Meta Platforms ahead of another round of Big Tech earnings while eyeing two key data releases prior to the opening bell.

Updated at 8:38 AM EDT

Slowing growth, faster inflation

The U.S. economy grew at a modest 1.6% pace over the first three months of the year, Commerce Department data indicated, slowing from the 3.4% pace recorded over the previous quarter and well shy of the 2.4% paced expected by the Street.

Core inflation pressures, however, spiked to 3.7%, according to the PCE data imbedded in the report, a move that likely pushes harder against bets of a Federal Reserve rate cut later in the year.

Stocks were notably weaker in the wake of the data, with futures tied to the S&P 500 indicating a 59 point opening bell decline and the Dow called 3 points lower. Nasdaq futures indicate a 260 point decline.

Benchmark 10-year Treasury notes were marked 5 basis points higher at 4.698% while 2-year notes rose 7 basis points to 4.993%.

❖ U.S PCE PRICES (Q1) ACTUAL: 3.4% VS 1.8% PREVIOUS

❖ U.S GDP PRICE INDEX (QOQ) (Q1) ACTUAL: 3.1% VS 1.7% PREVIOUS; EST 3.0%

❖ U.S CORE PCE PRICES (Q1) ACTUAL: 3.70% VS 2.00% PREVIOUS; EST 3.40%— *Walter Bloomberg (@DeItaone) April 25, 2024

Updated at 8:04 AM EDT

Fly American

American Airlines AAL shares surged higher in early trading after the carrier forecast adjusted profits for the current quarter of $1.15 to $1.145 per share, well above Street forecasts, that offset the sting of a $312 million loss over the three months ending in March.  

American shares were marked 5.3% higher in pre-market trading to indicate an opening bell price of $14.66 each.

Stock Market Today

Meta  (META)  is likely to be the biggest driver of market action at the open, with the $1.25 trillion stock called 13.37% lower in premarket trading following a solid set of first-quarter earnings figures, offset by surging expenses and a muted revenue outlook.

Investor concern that AI investments aren't leading to corresponding revenue gains in the tech space weighed on shares of Big Six peers Microsoft  (MSFT)  and Alphabet  (GOOG) , which report after the close of trading today, as well as Nvidia  (NVDA)  and Amazon  (AMZN) .

IBM  (IBM)  shares, meanwhile, were marked nearly 9% lower, and set for their biggest opening-bell decline in more than two years, after the tech giant posted mixed first-quarter earnings and unveiled plans to buy cloud-computing group HashiCorp for $6.4 billion.

That's left the Nasdaq looking at an opening-bell slump of around 165 points, with the S&P 500 called 33 points lower. The Dow Jones Industrial Average, meanwhile, is priced for a 210 point decline.

"The collateral damage form Meta is negative for digital ad companies such as Alphabet, Snap, Pinterest and Roku but the AI-based capex spend is a positive for Semis/Hardware companies such as Nvidia, Vertiv and Supermicro, etc.," JPMorgan analysts said Thursday. "Interestingly, the Tech misses are seemingly supportive of the rotation to Value with Russel 2000 outperforming pre-market.”

Prior to the start of trading, investors will also navigate the Commerce Department's first estimate of first quarter GDP growth, which is expected to show the economy grew at a 2.4% pace over the three months ended in March.

Key to the report will be the pace of price increases, which is tabbed at around 3.4%, with economists focused on productivity gains that go along with a growth rate that, while slowing, remains firmly above the Federal Reserve's so-called neutral pace of inflation of 1.8%.

Benchmark 10-year Treasury note yields were little changed at 4.646% heading into the GDP reading at 8:30 a.m. U.S. Eastern Time. Two-year notes are pegged at 4.929%.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.25% lower at 105.596.

More Wall Street Analysts:

• Analyst unveils new Nike price target ahead of big summer for sports
• Analysts weigh in on Google-parent Alphabet’s stock after cloud event
• Analysts revamp Disney stock price target after proxy fight

In overseas markets, Japan's tech-heavy Nikkei 225 fell 2.19% in Tokyo following Meta's first-quarter report and conference call, while the regionwide MSCI ex-Japan index was marked 0.37% lower into the close of trading.

In Europe, the Stoxx 600 slipped 0.18% in Frankfurt. Britain's FTSE 100 rose 0.63% in London and hit an all-time high of 8,102.14 points earlier in the session.

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