US stocks drop as investors take in revised GDP and await fresh inflation data

Feb 28, 2024
  • US stocks fell on Wednesday as traders took in the revised GDP print for the last quarter. 
  • GDP growth was revised lower for the quarter to 3.2%
  • Investors are waiting for PCE inflation on Thursday, which is the Fed’s preferred inflation measure.

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US stocks dropped on Wednesday as traders took in the revised economic growth data and looked ahead to a fresh inflation reading. Major indexes were lower, while the US 10-year Treasury yield was little changed at 4.297%. 

GDP growth for the fourth quarter of 2023 was revised slightly lower, with the economy estimated to have grown by 3.2%, according to the Bureau of Economic Analysis. That’s lower than the 3.3% growth originally reported for the quarter, and much lower than the pace of growth that was recorded over the third quarter, when GDP grew 4.9%.

Meanwhile, investors are waiting Thursday’s Personal Consumption Expenditures reading, which is the Fed’s preferred inflation measure. Economists are expecting PCE inflation to have accelerated, rising 0.3% over the month of January.

The reading will be an important data point when central bankers decide when and how far to lower interest rates this year.

“In a market environment where people are worried about a Fed keeping rates higher for longer, any drop in economic activity (or inflation) can be seen as another reason why the Fed can cut rates sooner,” Chris Zaccarelli, the chief investment officer for Independent Advisor Alliance, said in a note on Wednesday.

Investors have been pushing back their expectations for a coming Fed rate cut, as central bankers risk keeping rates higher for longer as they keep an eye on inflation. Markets are pricing a near 100% chance the Fed will keep rates level at their March policy meeting, up from just a 52% chance priced in a month ago, according to the CME FedWatch tool. 

Here’s where US indexes stood shortly after the 9:30 a.m. opening bell on Wednesday: 

Here’s what else happened today: 

In commodities, bonds, and crypto: 

  • West Texas Intermediate crude oil inched higher 0.6% to $79.33 a barrel. Brent crude, the international benchmark, ticked higher 0.44% to $82.81 a barrel. 
  • Gold rose 0.21% to $2,034.85 per ounce. 
  • The 10-year Treasury yield was nearly flat 4.301%.
  • Bitcoin jumped 6.51% to $60,515.

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