U.S. Stocks Climb Well Off Worst Levels But Close Mostly Lower

(RTTNews) - After moving sharply lower early in the session, stocks regained ground over the course of the trading day on Thursday but remained mostly lower. The major averages all finished the day in negative territory after ending Wednesday's trading narrowly mixed.

The Dow slumped 375.12 points or 1.0 percent to 38,085.80 after plunging by more than 700 points in early trading. The Nasdaq slid 100.99 points or 0.6 percent to 15,611.76 and the S&P 500 fell 23.21 points or 0.5 percent at 5,048.42.

A negative reaction to earnings news from Meta Platforms (META) contributed to the early sell-off on Wall Street, with the Facebook parent plunging by 10.6 percent.

Meta Platforms reported first quarter results that beat estimates on both the top and bottom lines but provided disappointing second quarter revenue guidance.

Tech giant IBM Corp. (IBM) also dove by 8.3 after reporting weaker than expected first quarter revenues. IBM also announced a deal to acquire HashiCorp (HCP) for $35 per share in cash, representing an enterprise value of $6.4 billion.

On the other hand, fellow Dow component Merck (MRK) jumped by 2.9 perent after reporting first quarter results that exceeded analyst estimates.

The early sell-off on Wall Street also came after Commerce Department released a report showing 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. Economists had expected GDP to jump by 2.5 percent.

Meanwhile, the Commerce Department said the personal consumption expenditures price index surged 3.4 percent in the first quarter after advancing by 1.8 percent in the fourth quarter.

Excluding food and energy prices, the PCE price index spiked 3.7 percent in the first quarter after jumping by 2.0 percent in the fourth quarter.

"The Fed wants to see inflation start coming down in a persistent manner, but the market wants to see economic growth and corporate profits increasing, so if neither are headed in the right direction then that's going to be bad news for markets," said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.

Selling pressure waned over the course of the session, however, inspiring some traders to pick up stocks at relatively reduced levels.

Sector News

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.

Meanwhile, gold stocks moved sharply higher on the day, resulting in a 4.2 percent spike by the NYSE Arca Gold Bugs Index.

Notable strength also emerged among semiconductor stocks, driving the Philadelphia Semiconductor Index up by 2.0 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index plunged by 2.2 percent, while Hong Kong's Hang Seng Index climbed by 0.5 percent.

The major European markets also ended the day mixed. While the U.K.'s FTSE 100 Index rose by 0.5 percent, the French CAC 40 Index slid by 0.9 percent and the German DAX Index slumped by 1.0 percent.

In the bond market, treasuries extended the downward move seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.4 basis points to a nearly six-month closing high of 4.706 percent.

Looking Ahead

Trading on Friday is likely to be driven by reaction to the Commerce Department's report on personal income and spending, which includes readings on inflation said to be preferred by the Federal Reserve.

On the earnings front, Google parent Alphabet (GOOGL), Intel (INTC) and Microsoft (MSFT) are among the companies releasing their quarterly results after the close of today's trading.

Energy giants Chevron (CVX) and Exxon Mobil (XOM) are also among the companies due to report their results before the start of trading on Friday.