Stocks decline as GDP report raises fears of recession

Stocks are falling early Thursday as buyers reacted to information that the US economic system shrank for a second consecutive quarter, sharply elevating rears that that the US economic system is already in or is heading for a recession.

The S&P 500 was down 0.4% as of 10 am Eastern, the Dow Jones Industrial Average dropped 0.4% and the technology-heavy Nasdaq Composite was down 0.6%.

The US economic system shrank from April via June, contracting at a 0.9% annual tempo. The decline that the Commerce Department reported Thursday within the gross home product — the broadest gauge of the economic system — adopted a 1.6% annual drop from January via March.

The Federal Reserve is attempting to gradual the US economic system to battle inflation with out tipping it right into a recession. (AP Photo/Seth Wenig)

Consecutive quarters of falling GDP represent an off-the-cuff, although not definitive, indicator of a recession. The GDP report for final quarter pointed to weak spot throughout the economic system.

Consumer spending slowed as Americans purchased fewer items. Business funding fell. Inventories tumbled as companies slowed their restocking of cabinets, shedding 2 proportion factors from GDP.

The Federal Reserve is attempting to gradual the US economic system to battle inflation with out tipping it right into a recession.

The central financial institution raised its key short-term rate of interest by 0.75 proportion factors on Wednesday. Shares of Facebook’s mum or dad firm Meta Platforms are down 8% after the social media big mentioned its income fell final quarter for the primary time ever, dragged down by a drop in advert spending.

Spirit Airlines shares rose 3%. JetBlue mentioned it agreed to purchase the price range airline for $3.8 billion to create the nation’s fifth largest airline, if accredited by US regulators. The settlement comes a day after Spirit’s try to merge with Frontier Airlines fell aside.