SPX: S&P 500 Drops 0.5% After Weak GDP Data Sparks Growth Worries, Earnings Keep Rolling In

Microsoft and Google parent Alphabet both beat earnings and revenue expectations but stocks broadly fell on slowing growth.

• The S&P 500 index drifted lower on Thursday after news out of the US signaled slowing growth and cast a shadow over investor optimism. Gross domestic product (GDP) expanded at a 1.6% annual rate in the first quarter, sliding below the 2.4% growth projected by analysts. What’s more, the print suggested that inflation may be catching up to the economy once again after a cooldown period.
• It was another reason for investors to dial down their high expectations over interest rate cuts this year. On the one hand, slowing growth is an indication of a cooling economy. But when price pressures underlie that downward trend, prospects for rate cuts diminish. The Federal Reserve’s favorite inflation gauge - PCE - is on deck for release later today.
• Earnings season, meanwhile, is picking up with reports from Big Tech flooding the space. On Thursday after the closing bell, Microsoft MSFT and Google parent Alphabet GOOGL delivered robust figures. Both tech heavyweights beat on profits and revenue estimates with Microsoft pulling in nearly $62 billion in revenue. Alphabet is on track to enter the elite $2 trillion club today after shares jumped 12% in off-hours trading.