Wall Street Movement Sluggish as Meta Results Shock Investors

Wall Street exhibited a tepid performance recently, staying relatively flat as traders braced themselves for impending economic data expected to influence the Federal Reserve's policy direction. Market participants were particularly focused on the upcoming gross domestic product (GDP) figures.

The trading session saw a lack of momentum after significant gains in the previous month. Anticipation built around the earnings report from Meta Platforms, which led to a noticeable drop in the company's stock price following the announcement of higher spending projections in post-market hours. This development once again sparked debates on the feasibility of CEO Mark Zuckerberg's investment in forward-looking tech ventures.

The Australian share market was not in operation due to the observance of Anzac Day. Prior to the holiday, the market ended on a neutral note post the release of the March quarter inflation data, indicating ongoing inflationary challenges that may postpone interest rate cuts by the Reserve Bank.

In the US, the Dow Jones experienced a minor retreat of 0.1%, while the S&P 500 remained unchanged, and the Nasdaq 100 saw a slight increase of 0.1%. Despite the subdued closing figures, post-market activities saw a flurry of movement, particularly with the reaction to Meta's financial report.

Looking forward to other major earnings reports, Mark Hackett of Nationwide suggested that this week would be telling of Wall Street's sentiment. The future performance of the so-called 'Magnificent Seven' mega-cap companies could spread market opportunities beyond these dominant players.

Of these, Tesla's share saw a significant boost of 12% after Elon Musk's commitment to produce more affordable cars, while Nvidia's stock halted following two days of gains. Boeing's shares fell by 2.9% after disclosing a first-quarter loss of $US355 million due to declining sales and increased scrutiny over its aircraft safety.

US Treasury bonds saw a downturn amidst fears of further losses despite a large-scale sale of notes. Investors have been reassessing the Federal Reserve's likelihood of introducing rate cuts, leaning on a sturdy series of economic data. Predictions by economists suggest the GDP might have grown by around 2.5% in the first quarter, with evidence of enduring inflation.

The anticipation of the GDP report has led market observers like Jose Torres at Interactive Brokers to hope for a modest number that would hasten rate reductions. However, a strong GDP result, while beneficial for revenue growth, might stall the anticipated rate cuts.

The threat of higher bond yields corresponds to traders demanding increased returns from government bonds, revising their expectations of rate cuts downwards. This revision in perspective points toward a costlier burden of servicing the US federal debt.

While the economic and geopolitical uncertainties contribute to lowering the attractions of lower-priced stocks, there have been contrasting movements in the market. Investors are withdrawing from value-based funds, while conversely, growth stocks are attracting considerable inflows despite market volatility that suggests a potential downside risk.

According to Katrina Dudley at Franklin Templeton, the market valuations are reasonable; she emphasizes the need for companies to continue delivering earnings growth. Matt Palazzolo of Bernstein Private Wealth Management highlights the importance of companies' forecasts for the rest of the year as a key aspect for market analysts.

WallStreet, Meta, Economy