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* U.S. economic system contracts once more in second quarter
* Meta Platforms income drops for first time
* Qualcomm flags weak smartphone demand
* Indexes down: Dow 0.38%, S&P 0.38%, Nasdaq 0.70% (Updates to open)
By Shreyashi Sanyal and Aniruddha Ghosh
July 28 (Reuters) – U.S. inventory indexes fell on Thursday weighed down by gloomy forecasts from Meta and Qualcomm, whereas an early studying confirmed the U.S. economic system contracted once more within the second quarter including to fears the economic system was already in recession.
Fears of runaway inflation and aggressive financial coverage tightening biting into financial progress have spooked markets, after gross home product fell at a 0.9% annualized fee final quarter, the Commerce Division mentioned in its advance GDP estimate.
A Reuters survey of economists confirmed GDP progress probably rebounded at a 0.5% annualized fee final quarter.
“Immediately’s studying solely provides gasoline to the fireplace that we’re in or getting into a recession,” mentioned Mike Loewengart, managing director at E*Commerce from Morgan Stanley.
“Whereas it’s definitely on the unfavourable facet of estimates, remember the fact that a 1% lower is comparatively small and helps the concept any recessionary atmosphere shall be gentle.”
Two consecutive quarters of declines in progress are historically thought of a recession, however the non-public analysis group that’s the official arbiter of U.S. recessions seems to be at a broad vary of indicators as a substitute, together with jobs and spending.
Worries of a recession hit Meta Platforms Inc shares, which fell 7.6% after posting its first-ever quarterly drop in income.
Qualcomm Inc fell 5.3% after it warned that troublesome financial situations and a slowdown in smartphone demand may hit its mainstay handset chips enterprise.
Shares of Apple Inc fell 0.7%, whereas Amazon.com Inc shed 1.4% forward of their quarterly experiences after market shut.
The Nasdaq clocked its largest every day proportion acquire since April 2020 on Wednesday after the U.S. Federal Reserve raised rates of interest as anticipated and feedback by Fed Chairman Jerome Powell eased some investor worries concerning the tempo of fee hikes.
The U.S. central financial institution’s tightening cycle has hammered mega-cap shares as future money flows, on which valuations of those corporations relaxation, are discounted closely when charges rise.
At 10:00 a.m. ET the Dow Jones Industrial Common was down 121.60 factors, or 0.38%, at 32,075.99, the S&P 500 was down 15.35 factors, or 0.38%, at 4,008.26, and the Nasdaq Composite was down 84.78 factors, or 0.70%, at 11,947.64.
Defensive sectors, together with S&P 500 utilities and actual property gained over 1% every in early buying and selling, pointing to a largely risk-off day.
Ford Motor Co gained 3.5% after reporting a better-than-expected quarterly internet earnings.
Advancing points outnumbered decliners for a 1.30-to-1 ratio on the NYSE, whereas declining points outnumbered advancers for a 1.33-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and 30 new lows, whereas the Nasdaq recorded 38 new highs and 41 new lows. (Reporting by Aniruddha Ghosh and Shreyashi Sanyal in Bengaluru; Modifying by Shounak Dasgupta)