U.S. gross domestic product rose 1.6 percent in the first quarter, while economists polled by Dow Jones had forecast GDP growth of 2.4 percent
Wall Street indices are in the deep red, after the latest economic data that showed a sharp slowdown in growth and a significant strengthening of inflation.
The industry average Dow Jones loses over 600 units, the global barometer S&P 500 is down more than 1.3%, and the Nasdaq Composite is also down more than 1.4%.
The gross domestic product of USA rose 1.6% in the first quarter, while economists polled by the Dow Jones had expected the increase GDP will be configured in 2.4%.
Along with the weak growth rate for the quarter, the report showed that consumer prices rose at a pace 3.4%, well above the 1.8% rise in the previous quarter. This caused concern and called into question whether the Federal Reserve will be able to cut interest rates soon.
“In the short term, the numbers don’t seem to be a green light for the bulls either” nor for the “bears“… Uncertainty is unlikely to ease pressures on a market experiencing its biggest decline since last year,” said Chris Larkin managing director of trading and investments at Morgan Stanley.
After his announcement GDP, the analysts lowered their expectations for an easing of the Federal Reserve’s monetary policy. Analysts now predict just one rate cut this year.
A continued decline in US GDP could cause problems for the stock market if inflation continues to prove stable, economists noted.
“Today’s economic data is bad on two levels: economic growth is slowing and inflationary pressures persist“, wrote o Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
“The Fed wants to see inflation start to come down in a persistent way, but the market wants to see economic growth and corporate profits rise, so if neither moves in the right direction, then that’s bad news. for the markets”emphasized Zaccarelli.
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