Stocks started Thursday with heavy bleeding. The Dow Jones Industrial Average plunged more than 650 points after quarterly earnings reports from tech giants such as Facebook parent Meta and IBM disappointed investors. And new data showed that economic growth slowed sharply last quarter.
The Commerce Department’s GDP report showed that growth was much weaker than expected. The U.S. gross domestic product grew at a seasonally adjusted annual rate of 1.6% in the first quarter of this year. That’s a decrease from the strong growth of 4.1% in the second half of last year.
The Dow quickly plummeted 655 points, or 1.7%, to 37,805 shortly after markets opened Thursday. The S&P 500 shed 1.3% and the Nasdaq dropped almost 1.6%.
The 10-year Treasury yield added 0.073 points to 4.727%, hitting its highest level since November 2023.
Meta stock sinks on big Metaverse losses
Meta stock plummeted more than 15% Thursday morning, even as the Facebook parent company reported better-than-anticipated sales in its quarterly earnings the day before. The losses appeared to be driven by the company’s steep Metaverse losses, and CEO Mark Zuckerberg’s commitment to continue that spending.
Meta reported revenues of $36.5 billion for the three months ended March 31, almost 30% higher than the same period last year and ahead of the expectations of Wall Street analysts surveyed by FactSet. And its profits more than doubled to $12 billion. Earnings per share were $4.71, more than the $4.32 expected.
Investors didn’t seem to care about those good fortunes, though. They cared, instead, about its lukewarm second-quarter outlook. The company issued light revenue guidance and is expecting revenues for the three months ending June 31 at $36.5 to $39 billion.
IBM stock drops
IBM released its first-quarter results on Wednesday after the market closed. The company surpassed earnings expectations but fell short on revenue. A $1.68 adjusted earnings per share was reported, versus an expected $1.60, while a $14.46 billion revenue was reported, compared to a $14.55 billion estimate. The company is acquiring cloud software company HashiCorp for $6.4 billion in cash, paying $35 per share.
IBM stock was down almost 9% Thursday morning.
Southwest lost $231 million in the first quarter
Southwest Airlines on Thursday said it would limit hiring and pull out of some airports after it posted a loss for the first quarter of 2024.
The Dallas-based operator lost $231 million from January through March, more than the $159 million loss it recorded during the same period in 2023. The airline lost 36 cents per share, slightly below the loss of 34 cents per share that Wall Street had expected. Revenue rose to $6.33 billion, but below analysts’ expectations of $6.42 billion.
Southwest is also taking a hit from delays at Boeing, which has slowed down production of new airplanes while it focuses on quality control issues. Just 20 Boeing 737 Max 8 jets are expected to be delivered to Southwest in 2024, even as the operator retires 35 other aircraft. Southwest had planned to receive 46 new planes this year and retire 49 aircraft.
Southwest Airlines stock was down 7.3% on Thursday morning.
–Laura Bratton and William Gavin contributed to this article.