Interest rate markets digest slowdown in US GDP growthrate
Mining sector M&A lifts FTSE to all-time high
Yen drops to latest 34-year low
(Updated at 2:34 p.m. ET (1834 GMT)
Stocks snapped a three-day winning streak on Thursday as disappointing forecasts from Facebook and Instagram owner Meta hammered the tech sector, and Japan's yen sank through 155 per dollar for the first time since 1990.
Tepid U.S. GDP data pushed Wall Street lower at its open, and Meta's slump META.O also soured the mood. More Big Tech earnings are scheduled for later in the day.
U.S. Treasury yields rose after the data showed signs of persistent inflation, lowering hopes that the Federal Reserve will cut interest rates anytime soon.
Gold trimmed gains.
MSCI's gauge of stocks across the globe .MIWD00000PUS fell 4.54 points, or 0.60%, to 754.92 by 2:34 p.m. ET (1834 GMT).
The Dow Jones Industrial Average .DJI fell 451.63 points, or 1.17%, to 38,009.29, the S&P 500 .SPX lost 33.99 points, or 0.67%, to 5,037.64, and the Nasdaq Composite .IXIC lost 140.87 points, or 0.90%, to 15,571.44.
In an earnings-packed week, tech bellwethers are in the spotlight, with Google parent Alphabet GOOGL.O , Microsoft MSFT.O and Intel INTC.O due to report after Thursday's closing bell.
"If Meta is a guide, it seems the market is simply not tolerant of in-line – if you've had a good run through Q1 & Q2 you either blow the lights out, or the market takes its pound of flesh," said Chris Weston, head of research at Pepperstone.
Robert Alster, chief investment officer at Close Brothers Asset Management, also noted the comments of Meta CEO Mark Zuckerberg on the need to spend to keep up in the AI arms race.
European shares closed down 0.7%, paring losses after shedding more than 1% intraday, hit by bleak earnings from consumer giant Nestle NESN.S and Dutch digital payments firm Adyen ADYEN.AS .
London's FTSE 100 .FTSE held onto gains, up 0.26% at a record high as UK-listed miner Anglo American AAL.L surged on a $39 billion buyout offer from Australian rival BHP (BHP) .
U.S. SLOWDOWN Beyond corporate earnings, investors were digesting the sharper-than-expected slowdown in first-quarter U.S. economic growth.
"Despite the expected GDP slowdown in 2024, there are no imminent signs of a recession," said Mutual of America Capital Management's chairman and chief executive, Stephen Rich.
Hotter-than-expected inflation reports have pushed back and reduced expectations for Federal Reserve interest rate cuts, with markets now pricing in roughly a 70% chance of a first reduction in September. Investors are not even fully convinced there will be another cut this year, having expected around six cuts at the start of the year. FEDWATCH
The shifting expectations of U.S. rates have lifted Treasury yields and the dollar, casting a shadow on the currency market.
Against a basket of currencies, the dollar .DXY ticked fractionally higher to 105.89 after the GDP data.
The yield on benchmark U.S. 10-year notes US10YT=RR rose 5.2 basis points to 4.706%, from 4.654% late on Wednesday.
The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations, rose 6.1 basis points to 4.9975%, from 4.937% late on Wednesday.
The Japanese yen JPY= weakened 0.12% against the greenback at 155.53 per dollar and touched its lowest level in 34 years. It is now firmly past the latest line in the sand traders had drawn for Japan to intervene in the markets.
"Tokyo has still not intervened, and I reiterate that it does look like there will be no intervention so long as USD/JPY's climb continues in a relatively non-volatile fashion," said RBC Capital Markets' head of Asian FX strategy, Alvin Tan.
The Bank of Japan started its two-day rate-setting meeting on Thursday, with expectations that it will keep its key short-term interest rate target unchanged.
Attention will be on what Bank of Japan Governor Kazuo Ueda's says about the yen's struggles.
U.S. crude CLc1 settled up 0.92% to $83.57 a barrel and Brent LCOc1 settled at $89.01 per barrel, up 1.12% on the day.
Spot gold XAU= added 0.68% to $2,331.49 an ounce. U.S. gold futures GCc1 fell 0.2% to $2,319.90 an ounce.
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