FX.co ★ Disappointing Earnings News, GDP Data Weighing On Wall Street

After a sluggish trading session yesterday, today's financial market has taken a sharp downturn. Major market indicators including the Dow, Nasdaq, and S&P500 closed significantly lower than the previous day's closing figures.

At the close of trading, the Dow stood 644.68 points (or 1.7%) lower at 37,816.24. The Nasdaq, similarly, was down by 261.43 points (or 1.7%) at 15,451.32. The S&P500 showed a decrease of 66.42 points (or 1.3%) ending at 5,005.21.

The considerable market drop was, in part, due to an unfavorable response to the quarterly earnings report from Meta Platforms, the parent company of Facebook. Despite beating estimates for both the welcome and bottom lines, Meta provided a less than satisfactory second quarter revenue forecast, resulting in a drastic 12.4% drop in its shares.

Another factor contributing to market pressures was the weaker than predicted first-quarter revenues reported by tech company IBM Corp. The tech company also announced the acquisition of HashiCorp at $35 a share, a deal worth $6.4 billion.

Contrarily, Merck, another Dow component, reported first quarter results surpassing analyst expectations, leading to a considerable increase in its shares.

The market turbulence followed the release of a report by the commerce department showing less than predicted growth in the U.S. economy in Q1 2024. The Gross Domestic Product showed a 1.6% increase in the quarter, a stark contrast to the 3.4% surge experienced in the last quarter of 2023. The figures fell short of economists' 2.5% growth expectation.

Price index figures excluding energy and food also showed a sharp increase. Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance, noted that if neither inflation nor economic growth and corporate profits improve, the consequence could be detrimental to the markets.

In sector news, software traded weakly, with Dow Jones U.S. Software Index dropping to a three-month intraday low. There was notable weakness among telecom stocks, with NYSE Arca North American Telecom Index falling to its lowest intraday level in over eight months. A significant drop was also noticeable in airline stocks, while gold stocks showed resilience.

In international markets, trends were mixed across the Asia-Pacific region with Japan's Nikkei 225 taking a significant hit, dropping 2.2% while Hong Kong's Hang Seng climbed 0.5%. Europe presented a mixed picture as well with the UK's FTSE 100 increasing by 0.3%, whereas the German DAX and the French CAC 40 both decreased by 1.1%.

Finally, in the bond market, the yield on the ten-year note increased by 6.0 basis points to 4.712 percent, indicating an extension of the downturn seen in the previous session.