Wall Street falls due to contraction of the economy that brings it closer to recession

Wall Street falls due to contraction of the economy that brings it closer to recession

U.S. stock indices fell on Thursday pressured by gloomy forecasts from Meta and Qualcomm, while an early reading showed the U.S. economy contracted again in the second quarter, raising fears that the economy is already in recession.

* Concerns about runaway inflation and aggressive monetary policy tightening hit markets after gross domestic product fell at an annualized rate of 0.9% last quarter, according to a Commerce Department report.

* A Reuters poll of economists had shown GDP growth likely to pick up to an annualized rate of 0.5% last quarter.

* “Today’s reading only adds fuel to the fire that we are in or entering a recession,” said Mike Loewengart, managing director of E*Trade at Morgan Stanley.

* “While certainly on the downside of the estimates, keep in mind that a 1% decline is relatively small and supports the idea that any recessionary environment will be mild,” he added.

* Two consecutive quarters of growth declines are traditionally considered a recession, but the private research group that is the official arbiter of business cycles in the United States looks instead at a wide range of indicators, including employment and spending.

* Recession fears weighed on shares of Meta Platforms Inc, which fell 7.6% after reporting the first quarterly drop in revenue.

* Shares of Apple Inc fell 0.7%, while Amazon.com Inc fell 1.4% ahead of its quarterly reports after the market closed.

* The Nasdaq had closed Wednesday for its biggest daily percentage gain since April 2020 after the US Federal Reserve raised interest rates, as expected, and comments from Fed Chairman Jerome Powell eased some investor concerns about the pace of increases in the cost of credit.

* By 1446 GMT, the Dow Jones Industrial Average was down 86.07 points, or 0.27%, at 32,112.16, while the S&P 500 was down 24.98 points, or 0.62%, at 3,998. .63 units. The Nasdaq fell 130.757 points, or 1.09%, to 11,901.666 points.

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