Meanwhile, U.S. economic growth slowed more than expected in the fourth quarter, reflecting disruptions from last year’s record government shutdown and moderating consumer spending. Gross domestic product rose 1.4% annually last quarter, compared with economists’ forecast GDP growth of 3.0%.Another report showed that underlying US inflation rose more than expected in December and signaled further acceleration in January, with traders holding on to expectations that the Fed would likely make its next rate cut in June after the data.
“(A) combination of slightly lower growth than we expected in the GDP numbers and slightly higher inflation than we expected during the PCE – that’s generally not a good combination for the stock market,” said Steve Wyett, chief investment strategist at BOK Financial.
“We don’t think the Fed should be aggressive in its rate cuts. So on balance, the data we got today still fits that narrative.”
S&P Global’s business activity survey and University of Michigan consumer sentiment data will also be released later today. At 9:32 a.m. ET, the Dow Jones Industrial Average fell 105.01 points, or 0.21%, to 49,290.15, the S&P 500 lost 16.50 points, or 0.24%, to 6,845.39, and the Nasdaq Composite lost 66.81 points, or 0.29%, to 22,615.92.
Eight of 11 S&P sectors fell, with losses in information technology and consumer discretionary the largest.
Most megacap and growth stocks, including Tesla and Nvidia, traded lower.
Private equity firm Blue Owl Capital lost 6.5% after falling 5.9% last session as the firm’s latest strategy to return capital from a small debt fund and permanently halt redemptions at one of the funds roiled investors and dragged down peers.
Other private equity firms, including KKR & Co and Apollo Global Management, also fell about 1% each.
Technology stocks have been under pressure in recent months due to concerns about high valuations and limited evidence that massive investments in AI are paying off. Industries ranging from software to real estate were plagued last week by concerns that new AI models could upend their business models.
Akamai Technologies fell 7.8% after the cloud company forecast first-quarter adjusted earnings that were lower than Wall Street estimates.
Copart lost 9.5% after the online vehicle auction service provider reported a decline in second-quarter profit and revenue.
Declining issues outnumbered advancers by a 1.29-to-1 ratio on the NYSE and by a 1.67-to-1 ratio on the Nasdaq.
The S&P 500 recorded five new highs and three new lows over the past 52 weeks, while the Nasdaq Composite recorded 14 new highs and 35 new lows.
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