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Stocks opened Thursday’s trading session higher after new data showed the U.S. economy contracted for the second-straight quarter in Q2.
Shortly after the opening bell, the S&P 500 and Nasdaq were up about 0.3%, while the Dow was up closer to 0.2%.
Data from the Commerce Department out Thursday morning showed GDP growth fell at an annualized rate of 0.9% in Q2, marking the second-straight quarter we’ve seen a drop in economic activity.
Thursday’s early move served as a continuation of sharp gains seen Wednesday after the Federal Reserve delivered an expected interest rate increase of 75 basis points and suggested it may slow the pace of its rate hiking cycle.
All three major indexes rallied following the U.S. central bank’s announcement. The S&P 500 jumped 2.6%, the Dow Jones Industrial Average gained 1.4%, and the tech-heavy Nasdaq Composite soared 4.1%.
Thursday’s GDP report is sure to continue the debate among investors about whether the U.S. economy is in recession, with many market participants judging two-straight quarters of lower growth as meeting a definition of recession.
White House officials have in recent days, however, been eager to remind the public that recessions are officially called by the NBER, which defines recession as, “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”
Treasury Secretary Janet Yellen is set to speak to reporters about today’s GDP data at 1:30 p.m. ET.
Elsewhere on the economic data calendar, the weekly report on initial jobless claims showed a slight moderation in first-time filings for unemployment insurance, totaling 256,000 last week after 261,000 filings the prior week.
Still, jobless claims data have been on a modest upward trend over the last several weeks.
On the earnings side, shares of Meta (META) were down more than 5.5% in early trading after the Facebook parent company reported second-quarter earnings late Wednesday that fell short of analyst estimates. The quarter also marked the social media giant’s first year-over-year revenue decline.
The company also cut its expense forecast again, and on a call with analysts CEO Mark Zuckerberg said, “we seem to have entered an economic downturn that will have a broad impact on the digital advertising business. It’s always hard to predict how deep or how long these cycles will be, but I’d say that the situation seems worse than it did a quarter ago.”
Zuckerberg added: “In this environment, we’re focused on making the long term investments that will position us to be stronger coming out of this downturn — including our work on our discovery engine and Reels, our new ads infrastructure, and the metaverse. We’re also focused on being rigorous about measuring returns and sizing these investments correctly.”
Earnings from more Big Tech heavyweights are due out Thursday, with Apple (AAPL) and Amazon (AMZN) on deck to report. Other big names among a busy earnings roster for the day include Pfizer (PFE), Comcast (CMCSA), Intel (INTC), and Roku (ROKU).
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