The stock markets in the United States declined after the Federal Reserve indicated the possibility of interest rate increases over the next few months.
The Federal Reserve issued its statement after the Department of Commerce reported that the U.S. economy expanded by only 0.2% during the first quarter.
The economic growth rate was lower than the 1% expansion expected by economists. During the previous quarter, the U.S. economic growth was 2.2%.
The weakness of the U.S. economy was “transitory,” according to policymakers. In a statement, the Federal Open Market Committee (FOMC) said, “Economic growth slowed during the winter months, in part reflecting transitory factors. The pace of job gains moderated, and underutilization of labor resources was little changed.”
Commenting on the statement of the FOMC, Quincy Krosby, a market strategist at Prudential Financial told Bloomberg, “If they had taken out the word transitory, you probably would have had the equity market turn positive. Just having that in there shows the Fed does believe it was, in fact, transitory i.e. we are going to be pushing into a rebound soon.”
On the other hand, Kristina Hooper, a U.S. investment strategist at Allianz Global Investors said, “It confirms people’s view that the Fed won’t raise interest rates in June – that’s certainly driven home today by GDP growth. But there is still some question mark because the Fed is blaming part of downturn in the first quarter on transitory factors.”
- Dow Jones Industrial Average (DJIA) – 18,035.53 (-0.41%)
- S&P 500- 2,106.86 (-0.37%)
- NASDAQ- 5,023.64 (-0.63%)
- Russell 2000- 1,248.46 (-0.87%)
- EURO STOXX 50 Price EUR- 3,617.11 (-2.65%)
- FTSE 100 Index- 6,946.28 (-1.20%)
- Deutsche Borse AG German Stock Index DAX- 11,432.72 (-3.21%)
- Nikkei 225- 20,058.95 (+0.38%)
- Hong Kong Hang Seng Index- 28,400.34 (-0.15%)
- Shanghai Shenzhen CSI 300 Index- 4,774.33 (+0.68%)
Stocks in Focus
The shares of Wynn Resorts declined more than 16% to $108.77 per share after reporting disappointing financial results for the first quarter. The company incurred losses of $44.6 million or $0.44 per share. Its revenue dropped 28% to $1.09 billion.
The stock price of Twitter closed $38.48 per share, down by almost 9%. The weak first quarter financial performance of the microblogging company continues to hurt its shares. Today, a law firm initiated an investigation on Twitter for possible securities fraud related to the company’s statements regarding its net users and advertising revenues.
Stratasys plummeted more than 22% to $39.93 per share after releasing its preliminary results for the first quarter. The company is now expecting to report revenues in the range of $171 million to $173 million and non-GAAP net income in the range of $1million to $2 million or $0.02 to $0.04 per diluted share.
Stratasys CEO David Reis said, “We are disappointed with our first quarter results. Despite these first quarter challenges, we remain focused on our current strategies to drive sales growth and adoption, and are committed to our multi-year investment plan.”