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The strong economic data has unsettled investors, who worry that signs of an economic recovery could prompt the Federal Reserve, which is trying to tame inflation, to keep interest rates high for a long time.
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CNN
—
US markets have had a tough week, with the Dow Jones Industrial Average falling almost 1,000 points in the past three days alone, and the decline continued on Thursday.
The Dow Jones Industrial Average closed down 331 points, or 0.9%, while the S&P 500 fell 0.6% and the Nasdaq Composite fell 1.1%, as poor earnings from Salesforce.com Inc. spooked investors.
Shares in the customer relationship management company fell 19.7%, its worst day in two decades, after earnings fell short of expectations and the company lowered expectations for the year ahead.
This came after a bad Wednesday for the market as a whole, with all 11 sectors of the S&P 500 closing lower. The Dow Jones Industrial Average fell more than 300 points, mainly due to a drop in shares of semiconductor giant Nvidia (NVDA), with big tech stocks falling along with it.
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This week’s decline was driven by a variety of factors, including corporate earnings and better-than-expected economic data. Bonds were particularly hit by rising inflation concerns and a weak Treasury auction on Wednesday, which pushed the 10-year Treasury yield to its highest level since late April.
Strong economic data has also spooked investors, who worry that signs of an economic recovery could prompt the Federal Reserve, which is trying to tame inflation, to keep interest rates higher for longer.
The S&P 500 has risen in 23 of the past 30 weeks, hitting its highest close since 1989, but is currently heading for a negative week.
“Stock prices have been on a relentless upward trajectory in recent weeks, but it has always been difficult to sustain,” Deutsche Bank analysts wrote Thursday. “It is clear that momentum has now turned more negative.”
New economic data released Thursday showed U.S. first-quarter gross domestic product was revised downward (to 1.3% from 1.6%) and consumer spending slowed, a sign that the economic expansion is slowing but which some analysts see as a double-edged sword.
“While this data may be cause for concern for corporate and stock market investors, slowing consumer spending and economic growth may be just the news needed to keep inflation declining and prompt the Fed to eventually cut interest rates,” Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, wrote Thursday.
Meanwhile, attention is focused on the April personal consumption expenditures index (an inflation indicator important to the Fed) to be released on Friday.
