Wall Street declines due to a slower-than-expected second-quarter GDP

Wall Street declines due to a slower-than-expected second-quarter GDP.

Wall Street’s main indices fell on Thursday, while investors were reminded that the Fed would cut interest rates by July or September. As recent reports indicate, the U.S. economy is still moving cautiously to bring down inflation to the target point of 2%. According to New York Federal Reserve President John Williams, inflation will hit its target by early 2026, according to Goldman and Sache. Meanwhile, marketers see that cutting interest rates might take a while since the Federal Reserve’s monetary policies are cautiously moving. For some, the only way to start cutting interest rates early is by initiating a hard landing, which is a long shot at the current time. Investors will now focus on the weekly journal claims and this month’s CPI and PPI reports.

Meanwhile, Wall Street’s U.S. stock fell on Thursday due to reports and data showing that U.S. growth in the second and first quarters was less than anticipated. The market estimation of the gross domestic product for the three months starting in March is slower than in June. As an estimate, the GDP of the first quarter was 1.6%, while in the second quarter, the number decreased to 1.3%. Previously, in the fourth quarter of 2023, GDP growth was 3.4%. Moreover, the quarterly personal consumption expenditures (PCE) index was revised down to 3.3% from 3.4%. The Core PCE index was revised to 3.6% from 3.7%, and real consumer spending growth for the quarter was revised to 2.0% from 2.5%. In turn, analysts at Wells Fargo attribute weaker economic performance to lower consumer spending. “Since the start of the Federal Reserve’s rate hikes more than two years ago, consumers have demonstrated resilience that defied the lessons of prior cycles. The lagged effect of monetary policy is long and variable. Are policymakers at the Fed finally getting through to the consumer?” With these words, questions about the effectiveness of the Federal Reserve’s policies on consumer behavior have been raised.

As of 15:44 a.m. ET, the S&P 500 benchmark was down by 0.62% to 5,235.90 basis points. The tech-heavy Nasdaq declined by 1.16% to 16,738.90 basis points. The Dow Jones Industrial Average decreased by 38.090.70 basis points. Moving to the commodity market, oil prices are set for weekly losses, with the main indices falling by an average of 1.7% this Thursday. The West Texas Intermediate was down by 1.77% to $77.9 per barrel. Brent crude oil was down by 1.8% to $81 per barrel. While the only weak market is the gold market, determining interest rates remains the main subject, and gold prices keep getting stronger.

Gold prices have shown strength due to various positive factors. Macquarie commodity strategists noted gold prices reaching new highs, driven by factors other than U.S. interest rates and the dollar. Broader risk-on sentiment in metals markets has benefited gold prices. Gold is outperforming across asset classes and macroeconomic levels, trading on its reputation as a safe asset with no counterparty risk.