US markets end lower after weak GDP data

26 Apr 2024 Evaluate

The US markets ended lower on Thursday after a report released by the Commerce Department on Thursday showed the U.S. economy grew by much less than expected in the first quarter of 2024. The Commerce Department said gross domestic product increased by 1.6 percent in the first quarter after surging by 3.4 percent in the fourth quarter of 2023. Street had expected GDP to jump by 2.5 percent. The GDP growth in the first quarter reflected increases in consumer spending, residential fixed investment, nonresidential fixed investment, and state and local government spending. The Commerce Department said the notable slowdown in GDP growth compared to the previous quarter primarily reflected decelerations in consumer spending, exports, and state and local government spending and a downturn in federal government spending.

The report showed consumer spending growth slowed to 2.5 percent in the first quarter from 3.3 percent in the fourth quarter, with an increase in spending services partly offset by a decrease in spending on goods. On the sectoral front, despite the recovery attempt by the broader markets, telecom stocks continued to see substantial weakness on the day, with the NYSE Arca North American Telecom Index plunging by 2.7 percent. Significant weakness also remained visible among software stocks, as reflected by the 1.8 percent loss posted by the Dow Jones U.S. Software Index. Biotechnology, banking stocks and networking stocks also continued to see considerable weakness, although selling pressure waned from earlier in the session.

Dow Jones Industrial Average fell 375.12 points or 0.98 percent to 38,085.8, Nasdaq dropped 100.99 points or 0.64 percent to 15,611.76 and S&P 500 was down by 23.21 points or 0.46 percent to 5,048.42.