combining stubbornly high inflation with a flagging economy dragged U.S. stocks lower on Thursday. A sharp drop for Facebook’s parent company, one of Wall Street’s most influential stocks, also hurt the market.
That’s what Wall Street calls a “soft landing” scenario, and expectations had grown recently for a “no landing” where the economy avoids a recession completely. Thursday’s economic data will likely get revised a couple times as the U.S. government fine-tunes the numbers. But the lower-than-expected growth and higher-than-expected inflation is “a bit of a slap in the face to those hoping for a ‘no landing’ scenario,” said Brian Jacobsen, chief economist at Annex Wealth Management.
That helped blunt the worry caused by the report, helping markets to pare their morning losses, but it did not erase the threat. Traders are largely betting on the possibility of just one or maybe two cuts to interest rates this year by the Fed, if any, according to data from CME Group. They came into the year forecasting for a while at its highest level since 2001. High rates slow the overall economy and hurt prices for investments, while cuts could help inflation reaccelerate.
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