Wall Street dips as US economy slips / Photo: © GETTY IMAGES NORTH AMERICA/AFP/File
Wall Street dips as US economy slips
Wall Street stocks slid on Thursday despite data showing the US economy contracted for a second straight quarter.
The drop follows a surge in Wall Street's main stock indices on Wednesday, after investors welcomed comments by US Federal Reserve chief Jerome Powell suggesting its next super-sized increase could be its last.
The Federal Reserve hiked interest rates by three-quarters of a percentage point, its second hike in a row of that magnitude and the fourth increase this year.
"The reported basis for the positive response was a belief that the Fed Chair effectively lowered the temperature on the future pace of rate hikes," said market analyst Patrick J. O'Hare at Briefing.com.
O'Hare said the reversal "is being pinned in part on the idea that the stock market overreacted to what the Fed Chair said yesterday."
While equities moved higher at the open of trading, they quickly fell back.
About 20 minutes into trading, the Dow was down 0.4 percent, the broader S&P 500 shed 0.5 percent and the tech-heavy Nasdaq Composite -- which jumped 4.1 percent on Wednesday, gave up 0.8 percent.
US gross domestic product (GDP) fell at an annual rate of 0.9 percent in the April-June quarter, following a 1.6 percent decline in the first quarter.
Two consecutive quarters of contraction in GDP is generally accepted as the technical definition of a recession.
Meanwhile, a key inflation measure, the personal consumption expenditures price index, rose 7.1 percent in the latest three months, the same pace as in the first quarter, the data showed.
The Fed and other central banks have been raising interest rates to rein in soaring inflation, but that risks slowing growth or even tipping the economy into recession.
European stock markets were mostly higher in afternoon trading.
Europe's energy sector was in particular focus with Britain's Shell and France's TotalEnergies posting bumper second-quarter profits on elevated oil and gas prices.
Asian indices mostly climbed following a surge on Wall Street, fuelled by hopes that the US central bank could slow its pace of inflation-fighting interest rate hikes.
The dollar meanwhile struggled to bounce back from a sell-off -- sitting at a month low against the yen -- that came in response to Powell's comments.
Oil prices rallied as data showed a big drop in US stockpiles.
- Key figures at around 1330 GMT -
London - FTSE 100: DOWN less than 0.1 percent at 7,345.82 points
Frankfurt - DAX: UP 0.5 percent at 13,235.94
Paris - CAC 40: UP 0.7 percent at 6,302.36
EURO STOXX 50: UP 0.7 percent at 3,633.97
New York - Dow: DOWN 0.4 percent at 32,281.15
Tokyo - Nikkei 225: UP 0.4 percent at 27,815.48 (close)
Hong Kong - Hang Seng Index: DOWN 0.2 percent at 20,622.68 (close)
Shanghai - Composite: UP 0.2 percent at 3,282.58 (close)
Euro/dollar: DOWN at $1.0170 from $1.0200 Wednesday
Pound/dollar: UP at $1.2160 from $1.2158
Euro/pound: DOWN at 83.62 pence from 83.89 pence
Dollar/yen: DOWN at 134.51 yen from 136.57 yen
Brent North Sea crude: UP 1.6 percent at $108.30 per barrel
West Texas Intermediate: UP 1.6 percent at $98.85 per barrel
burs-rl/lcm
(F.Moulin--LPdF)
